TORONTO, March 2, 2022
/CNW/ - George Weston Limited (TSX: WN) ("GWL" or the "Company")
today announced its consolidated unaudited results for the 12 weeks
ended December 31, 2021.
GWL's 2021 Annual Report includes the Company's audited
annual consolidated financial statements and Management's
Discussion and Analysis ("MD&A") for the fiscal year ended
December 31, 2021. The 2021 Annual
Report has been filed on SEDAR and is available at sedar.com and in
the Investor Centre section of the Company's website at
weston.ca.
"In the quarter, we were pleased to complete the sale of our
Weston Foods business, so that we can focus on our market leading
businesses in retail and real estate," said Galen G. Weston, Chairman and Chief Executive
Officer, George Weston Limited. "Loblaw and Choice Properties
showed strength in the fourth quarter as they delivered improved
results across the board. With robust strategic agendas at Loblaw
and Choice Properties, we remain confident in the long-term value
creation opportunities for each of them."
Loblaw Companies Limited ("Loblaw") experienced strong demand as
consumers continued to eat-at-home, particularly over the holiday
period. Loblaw's focus on retail excellence resulted in operational
and financial improvements, despite supply chain and inflationary
pressures. Loblaw's food retail performance was strong, driven by
impactful promotional strategies, and benefited from the return of
price-sensitive customers. Loblaw's drug retail sales benefited
from the loosening of social restrictions in the quarter. Loblaw's
drug retail business continued to play an important role in
supporting communities nationwide with COVID-19 testing and vaccine
services. Additionally, Loblaw continued to progress its
ambitious Environmental, Social and Governance ("ESG") program by
announcing its intention to reach net-zero carbon emissions by
2050.
Choice Properties Real Estate Investment Trust ("Choice
Properties") posted solid financial and operational performance
driven by its portfolio of high-quality real estate assets. Choice
Properties completed over $275
million of real estate transactions and $115 million of new developments for the quarter,
continuing to improve its portfolio and delivering net asset
growth. During the quarter, Choice Properties also advanced its
commitment to sustainability with the inaugural issuance of
$350 million of green bonds and by committing to set enhanced
science-based emission reduction targets. Choice Properties'
balance sheet remains strong and is well positioned to support the
continued advancement of development initiatives.
With the sale of the Weston Foods bakery business for total
gross proceeds of $1,470 million in
December 2021, the Company's interest
in Weston Foods is presented under discontinued operations.
See "Sale of Weston Foods and
Discontinued Operations" section of this News Release for further
details. Unless otherwise indicated, all financial information in
this News Release reflects the results from continuing
operations.
2021 FOURTH QUARTER HIGHLIGHTS
As a result of the Company's reporting calendar, the fourth
quarter and full year 2020 included an extra week of operations
("the 53rd week") compared to 2021.
George Weston Limited's net earnings available to common
shareholders of the Company from continuing operations were
$418 million in the fourth quarter of 2021, an increase of
$154 million compared to the fourth
quarter of 2020. The increase was due to the favourable
year-over-year net impact of adjusting items totaling
$75 million and an improvement in the Company's consolidated
underlying operating performance of $79 million. Diluted net
earnings per common share from continuing operations were
$2.80, an increase of $1.08 per common share, or 62.8%, when compared
to the fourth quarter of 2020.
Adjusted net earnings available to common shareholders of the
Company(1) from continuing operations were $347 million in the fourth quarter of 2021, an
increase of $79 million, or 29.5%, compared to the fourth
quarter of 2020. The increase was primarily due to the improvement
in the underlying operating performance of Loblaw, the favourable
year-over-year impact of asset impairments, net of recoveries
recorded on consolidation and lower adjusted net interest expense
and other financing charges(1), partially offset by the
impact of a higher adjusted effective tax rate(1).
Adjusted diluted net earnings per common share(1)
from continuing operations were $2.32
in the fourth quarter of 2021, an increase of $0.58 per common share, or 33.3%, compared to the
fourth quarter of 2020. The increase was due to the improvement in
adjusted net earnings available to common shareholders of the
Company(1) from continuing operations and the favourable
impact of share repurchases when compared to the fourth quarter of
2020.
CONSOLIDATED RESULTS OF OPERATIONS
The Company's results reflect the impact of COVID-19 and the
year-over-year impact of the fair value adjustment of the Trust
Unit liability as a result of the significant changes in Choice
Properties' unit price, recorded in net interest expense and other
financing charges. The Company's results are impacted by market
price fluctuations of Choice Properties' Trust Units on the basis
that the Trust Units held by unitholders, other than the Company,
are redeemable for cash at the option of the holder and are
presented as a liability on the Company's consolidated balance
sheet. The Company's financial results are negatively impacted when
the Trust Unit price rises and positively impacted when the Trust
Unit price declines.
The Company's interest in Weston Foods is presented separately
as discontinued operations in the Company's current and comparative
results. Unless otherwise indicated, all financial information
represents the Company's results from continuing operations.
(unaudited)
|
Quarters
Ended
|
|
|
Years Ended
|
|
|
|
($ millions except
where otherwise
indicated)
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
|
|
For the periods ended
as indicated
|
(12 weeks
)
|
(13 weeks)
|
$ Change
|
% Change
|
(52
weeks)
|
(53
weeks)
|
$ Change
|
% Change
|
|
Revenue
|
$
|
12,902
|
$
|
13,430
|
$
|
(528)
|
(3.9)%
|
$
|
53,748
|
$
|
53,270
|
$
|
478
|
0.9%
|
|
Operating
income
|
$
|
1,009
|
$
|
869
|
$
|
140
|
16.1%
|
$
|
4,027
|
$
|
2,875
|
$
|
1,152
|
40.1%
|
|
Adjusted
EBITDA(1)
|
$
|
1,453
|
$
|
1,396
|
$
|
57
|
4.1%
|
$
|
5,995
|
$
|
5,356
|
$
|
639
|
11.9%
|
|
Adjusted EBITDA
margin(1)
|
11.3%
|
10.4%
|
|
|
11.2%
|
10.1%
|
|
|
|
Net earnings
attributable to
shareholders of the Company
from continuing operations
|
$
|
428
|
$
|
274
|
$
|
154
|
56.2%
|
$
|
753
|
$
|
957
|
$
|
(204)
|
(21.3)%
|
|
Net earnings
available to
common shareholders
of the Company
|
$
|
217
|
$
|
289
|
$
|
(72)
|
(24.9)%
|
$
|
387
|
$
|
919
|
$
|
(532)
|
(57.9)
%
|
|
Continuing
operations
|
$
|
418
|
$
|
264
|
$
|
154
|
58.3%
|
$
|
709
|
$
|
913
|
$
|
(204)
|
(22.3)
%
|
|
Discontinued
operations
|
$
|
(201)
|
$
|
25
|
$
|
(226)
|
(904.0)%
|
$
|
(322)
|
$
|
6
|
$
|
(328)
|
(5,466.7)%
|
|
Adjusted net earnings
available
to common shareholders
of the Company(1) from
continuing operations
|
$
|
347
|
$
|
268
|
$
|
79
|
29.5%
|
$
|
1,232
|
$
|
993
|
$
|
239
|
24.1%
|
|
Diluted net earnings
per
common share ($)
|
$
|
1.44
|
$
|
1.88
|
$
|
(0.44)
|
(23.4)%
|
$
|
2.52
|
$
|
5.96
|
$
|
(3.44)
|
(57.7)%
|
|
Continuing
operations
|
$
|
2.80
|
$
|
1.72
|
$
|
1.08
|
62.8%
|
$
|
4.66
|
$
|
5.92
|
$
|
(1.26)
|
(21.3)%
|
|
Discontinued
operations
|
$
|
(1.36)
|
$
|
0.16
|
$
|
(1.52)
|
(950.0)%
|
$
|
(2.14)
|
$
|
0.04
|
$
|
(2.18)
|
(5,450.0)%
|
|
Adjusted diluted net
earnings per
common share(1) from
continuing
operations ($)
|
$
|
2.32
|
$
|
1.74
|
$
|
0.58
|
33.3%
|
$
|
8.14
|
$
|
6.44
|
$
|
1.70
|
26.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a result of the Company's reporting calendar, the fourth
quarter of 2020 included a 53rd week. The 53rd week of 2020
resulted in an additional $878 million of revenue,
$67 million of operating income, and net earnings available to
common shareholders of the Company from continuing operations and
diluted net earnings per common share from continuing operations of
$18 million and $0.12 per common share, respectively.
In the fourth quarter of 2021, the Company recorded net earnings
available to common shareholders of the Company from continuing
operations of $418 million ($2.80 per common share), an increase of
$154 million ($1.08 per common share) compared to the fourth
quarter of 2020. The increase was due to the favourable
year-over-year net impact of adjusting items totaling
$75 million ($0.50 per common
share) and an improvement in the Company's consolidated underlying
operating performance of $79 million ($0.58 per common share) described below.
- The favourable year-over-year net impact of adjusting items
totaling $75 million ($0.50 per common share) was due to:
-
- the favourable impact of the recovery related to Glenhuron Bank
Limited ("Glenhuron") at Loblaw of $165
million ($1.12 per common
share). The recovery relates to a reversal of taxes previously paid
in relation to Loblaw's Glenhuron tax matter; and
- the favourable year-over-year impact of the fair value
adjustment on investment properties of $69
million ($0.46 per common
share);
partially offset by,
-
- the unfavourable year-over-year impact of the fair value
adjustment of the Trust Unit liability of $102 million ($0.70
per common share) as a result of the increase in Choice Properties'
unit price in the fourth quarter of 2021; and
- the unfavourable year-over-year impact of the fair value
adjustment of the forward sale agreement of Loblaw common shares of
$56 million ($0.36 per common share). The Company settled the
net debt associated with the forward sale agreement in the fourth
quarter of 2021, see "Consolidated Other Business Matters" in this
News Release.
- The improvement in the Company's consolidated underlying
operating performance of $79 million
($0.58 per common share), which
included the negative year-over-year impact of the 53rd week of
$18 million ($0.12 per common share), was due to:
-
- the favourable underlying operating performance of Loblaw;
- the favourable year-over-year impact in Other and Intersegment,
primarily driven by the year-over-year impact of asset impairments,
net of recoveries of $25 million, net
of tax recorded on consolidation, and the gain related to Choice
Properties' sale and leaseback transactions of $7 million, net of tax, as described in
"Consolidated Other Business Matters"; and
- a decrease in adjusted net interest expense and other financing
charges(1);
partially offset by,
-
- an increase in the adjusted effective tax rate(1)
primarily attributable to the unfavourable year-over-year impact of
the non-taxable portion of the gain from Choice Properties'
transactions and the impact of certain other non-deductible
items.
- Diluted net earnings per common share from continuing
operations also included the favourable impact of shares purchased
for cancellation over the last 12 months ($0.09 per common share) pursuant to the Company's
Normal Course Issuer Bid ("NCIB").
Adjusted net earnings available to common shareholders of the
Company(1) from continuing operations in the fourth
quarter of 2021 were $347 million, an increase of
$79 million, or 29.5%, compared to the fourth quarter of 2020.
The increase was due to the improvement in the Company's
consolidated underlying operating performance described above.
Adjusted diluted net earnings per common share(1)
from continuing operations in the fourth quarter of 2021 were
$2.32 per common share, an increase
of $0.58 per common share, or 33.3%,
compared to the fourth quarter of 2020. The increase was due to the
improvement in adjusted net earnings available to common
shareholders of the Company(1) from continuing
operations and the favourable impact of share repurchases.
SALE OF WESTON FOODS AND DISCONTINUED OPERATIONS
On March 23, 2021, the Company
announced its intention to launch a process to sell the Weston
Foods business, comprised of the fresh, frozen and ambient bakery
businesses. On December 10, 2021, the
Company announced the sale of Weston Foods' fresh and frozen bakery
business to FGF Brands Inc. for gross proceeds of $1,100 million, and on December 29, 2021, the Company announced the sale
of Weston Foods' ambient business to affiliated entities of
Hearthside Foods Solution, LLC for gross proceeds of $370 million. In aggregate, the Company sold its
entire Weston Foods bakery business for total gross proceeds of
$1,470 million.
Upon the respective sale dates, the net assets of Weston Foods
were de-recognized from the Company's 2021 consolidated balance
sheet and the Weston Foods results, net of intersegment
eliminations, were presented separately as discontinued operations
in the Company's consolidated statement of earnings and
comprehensive income in the current and comparative periods.
The sale of Weston Foods resulted in a loss of
$317 million, after income taxes, recorded in discontinued
operations in 2021. For further details of the sale, refer to Note
5, "Discontinued Operations" in the annual consolidated financial
statements of the Company's 2021 Annual Report.
In the fourth quarter of 2021 and 2020, discontinued operations
represent the results of Weston Foods, net of intersegment
eliminations.
Net loss available to common shareholders of the Company from
discontinued operations in the fourth quarter of 2021 was
$201 million ($1.36 per common
share) compared to net earnings available to common shareholders of
the Company from discontinued operations of $25 million
($0.16 per common share) in the
fourth quarter of 2020, a decrease of $226 million
($1.52 per common share). The
decrease included the loss on the sale of Weston Foods of
$204 million, after income taxes, recorded in the fourth
quarter of 2021, and the underlying operating performance of Weston
Foods.
CONSOLIDATED OTHER BUSINESS MATTERS
COVID-19 RELATED COSTS The Company incurred
COVID-19 related costs of approximately $9 million and
$150 million in the fourth quarter and year of 2021,
respectively (2020 – $48 million and $466 million),
primarily related to safety and security measures to protect
colleagues, customers, tenants and other stakeholders. The
estimated COVID-19 related costs incurred by each of the Company's
reportable operating segments were as follows:
(unaudited)
($ millions)
|
Quarters
Ended
|
Years Ended
|
|
Dec. 31,
2021
|
Dec. 31,
2020
|
Dec. 31,
2021
|
Dec. 31,
2020
|
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
Loblaw(i)
|
|
$
|
8
|
$
|
45
|
$
|
145
|
$
|
445
|
Choice
Properties(ii)
|
|
1
|
3
|
5
|
21
|
Consolidated
|
|
$
|
9
|
$
|
48
|
$
|
150
|
$
|
466
|
|
|
|
|
|
|
|
|
(i)
|
Loblaw's COVID-19
related costs included $25 million and $180 million related to
one-time bonuses and benefits for store and distribution centre
colleagues in the second quarters of 2021 and 2020, respectively.
|
(ii)
|
Choice Properties
recorded a provision of $1 million (2020 – $3 million) and $5
million (2020 – $21 million) in the fourth quarter of 2021
and year-to-date, respectively, for certain past
due amounts, reflecting increased collectability risk and
negotiated rent abatements.
|
GWL CORPORATE(5) FINANCING
ACTIVITIES The Company completed the following
financing activities during the periods indicated below. The cash
impacts of these activities are set out below:
|
Quarters
Ended
|
Years Ended
|
(unaudited)
|
Dec. 31,
2021
|
Dec. 31,
2020
|
Dec. 31,
2021
|
Dec. 31,
2020
|
($ millions)
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
Settlement of net debt
associated with equity
forward sale agreement
|
$
|
(275)
|
$
|
—
|
$
|
(790)
|
$
|
—
|
GWL's credit
facility
|
121
|
—
|
121
|
—
|
GWL's NCIB – purchased
and cancelled(i)(ii)
|
(167)
|
(123)
|
(744)
|
(123)
|
GWL's participation in
Loblaw's NCIB
|
89
|
75
|
563
|
336
|
Net cash flow (used in)
from above activities
|
$
|
(232)
|
$
|
(48)
|
$
|
(850)
|
$
|
213
|
|
|
|
|
|
|
|
(i)
|
$6 million of cash
consideration related to common shares repurchased under the NCIB
for cancellation in the fourth quarter of 2021 was paid in the
first quarter of 2022.
|
(ii)
|
$31 million of cash
consideration related to common shares repurchased under the NCIB
for cancellation in the third quarter of 2021 was paid in the
fourth quarter of 2021.
|
Settlement of Net Debt Associated with Equity Forward Sale
Agreement In the fourth quarter of 2021, the Company
completed the settlement of the net debt associated with the equity
forward sale agreement. As a result, the 9.6 million Loblaw shares
securing the net debt were released from security and the Company's
economic interest in Loblaw is now equal to its voting interest. In
aggregate, $790 million was paid to
settle the net debt, resulting in the extinguishment of the Series
A debentures ($466 million), Series B
debentures ($784 million), plus
accrued interest, and the settlement of the equity forward sale
agreement ($464 million gain).
Refer to Section 3.3, "Components of Total Debt" of the MD&A
in the Company's 2021 Annual Report for more information.
GWL's Credit Facility In the fourth quarter
of 2021, the Company drew $275
million on its $350 million
revolving committed credit facility to fund the final settlement of
the net debt associated with the equity forward agreement. The
credit facility was partially repaid in the fourth quarter of 2021
and at December 31, 2021,
$121 million was drawn. Subsequent to
the end of the fourth quarter of 2021, the drawn balance was fully
repaid.
Refer to Section 3.3, "Components of Total Debt" of the MD&A
in the Company's 2021 Annual Report for more information.
GWL's NCIB – Purchased and Cancelled Shares
In the fourth quarter of 2021, the Company purchased and cancelled
1.0 million shares under its NCIB (2020 – 1.3 million shares).
As at December 31, 2021, the Company
had 146.6 million shares outstanding (December 31, 2020 – 152.1 million).
Refer to Section 3.6, "Share Capital" of the MD&A in the
Company's 2021 Annual Report for more information.
GWL's Participation in Loblaw's NCIB
Commencing in the first quarter of 2020, the Company began
participating in Loblaw's NCIB in order to maintain its
proportionate percentage ownership interest. During the fourth
quarter of 2021, GWL received proceeds of $89 million (2020 –
$75 million) from the sale of Loblaw
shares.
CHOICE PROPERTIES' SALE AND LEASEBACK TRANSACTIONS
In the fourth quarter of 2021, Choice Properties disposed of
two properties to third parties for aggregate proceeds of
$28 million. These transactions were accounted for as a
disposition by Choice Properties. On consolidation, the
arrangements were accounted for as sale and leaseback transactions
because Loblaw continues to be a tenant on the properties. As a
result, the Company recorded a lease liability of $19 million,
and a gain of $7 million in operating income.
REPORTABLE OPERATING SEGMENTS
The Company operates through its two reportable operating
segments: Loblaw and Choice Properties. Other and Intersegment
includes eliminations, intersegment adjustments related to the
consolidation and cash and short-term investments held by the
Company. All other company level activities that are not allocated
to the reportable operating segments, such as interest expense,
corporate activities and administrative costs are included in Other
and Intersegment.
Loblaw has two reportable operating segments, retail and
financial services. Loblaw's retail segment consists primarily of
food retail and drug retail. Loblaw provides Canadians with
grocery, pharmacy, health and beauty, apparel, general merchandise
and financial services.
Choice Properties owns, manages and develops a high-quality
portfolio of commercial retail, industrial, office and residential
properties across Canada.
Loblaw Operating Results
(unaudited)
|
Quarters
Ended
|
|
|
Years
Ended
|
|
|
($ millions except
where otherwise
indicated)
|
Dec. 31,
2021
|
Dec. 31,
2020(3)
|
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3)
|
|
|
For the periods ended
as indicated
|
(12
weeks)
|
(13 weeks)
|
$ Change
|
% Change
|
(52
weeks)
|
(53 weeks)
|
$ Change
|
% Change
|
Revenue
|
$
|
12,757
|
$
|
13,286
|
$
|
(529)
|
(4.0)%
|
$
|
53,170
|
$
|
52,714
|
$
|
456
|
0.9%
|
Operating
income
|
$
|
703
|
$
|
700
|
$
|
3
|
0.4%
|
$
|
2,929
|
$
|
2,357
|
$
|
572
|
24.3%
|
Adjusted
EBITDA(1)
|
$
|
1,322
|
$
|
1,311
|
$
|
11
|
0.8%
|
$
|
5,579
|
$
|
4,996
|
$
|
583
|
11.7%
|
Adjusted EBITDA
margin(1)
|
|
10.4%
|
|
9.9%
|
|
|
|
|
10.5%
|
|
9.5%
|
|
|
|
Depreciation
and
amortization(i)
|
$
|
623
|
$
|
609
|
$
|
14
|
2.3%
|
$
|
2,664
|
$
|
2,596
|
$
|
68
|
2.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Depreciation and
amortization in the fourth quarter of 2021 includes
$117 million (2020 – $117 million) and $506 million
(2020 – $509 million) year-to-date of amortization of
intangible assets acquired with Shoppers Drug Mart Corporation
("Shoppers Drug Mart").
|
Unless otherwise indicated, Loblaw's operating results include
the 53rd week in 2020.
Revenue Loblaw revenue in the fourth quarter of
2021 was $12,757 million, a
decrease of $529 million, or 4.0%, compared to the fourth
quarter of 2020. The decrease was primarily driven by a decrease in
retail sales, partially offset by an improvement in financial
services revenue.
Retail sales were $12,486 million, a decrease of
$557 million, or 4.3%, compared to the fourth quarter
of 2020, which included the negative impact of the 53rd week
in 2020 of $878 million.
- food retail sales were $8,742
million (2020 – $9,302
million) and food retail same-store sales growth was 1.1%
(2020 – 8.6%) for the quarter. Sales were impacted by lower
eat-at-home trends after strong growth last year, offset by higher
industry inflation levels. The two year food retail sales Compound
Annual Growth Rate ("CAGR")(6) was 4.8%. On a comparable
week basis, food retail basket size decreased and traffic increased
in the quarter;
- the Consumer Price Index ("CPI") as measured by The Consumer
Price Index for Food Purchased from Stores was 4.8% (2020 – 1.5%),
which was slightly lower than Loblaw's internal food inflation;
and
- drug retail sales of $3,744
million (2020 – $3,741
million) and drug retail same-store sales growth was 7.9%
(2020 – 3.7%) for the quarter. Pharmacy same-store sales growth
benefited from strong sales in pharmacy related services. Front
store same-store sales growth benefited from the economic
re-opening in the third quarter of 2021. The two year drug retail
sales CAGR(6) was 5.5%. Pharmacy same-store sales growth
was 10.2% (2020 – 5.0%) and front store same-store sales growth was
6.1% (2020 – 2.8%).
In 2021, 23 food and drug stores were opened and 24 food and
drug stores were closed, resulting in a net increase in retail
square footage of 0.2 million square feet, or 0.3%.
Financial services revenue in the fourth quarter of 2021
increased by $40 million compared to the fourth quarter of
2020 mainly due to higher interchange income from an increase in
customer spending and higher sales attributable to The Mobile
Shop.
Operating income Loblaw operating income in the
fourth quarter of 2021 was $703 million, an increase of
$3 million compared to the fourth quarter of 2020, which
was negatively impacted by $67 million due to the 53rd week in
2020. The increase in operating income was driven by the favourable
year-over-year net impact of adjusting items totaling
$6 million, partially offset by a decline in underlying
operating performance of $3 million, as described below:
- the favourable year-over-year net impact of adjusting items
totaling $6 million was primarily due
to the following:
-
- the favourable year-over-year impact of restructuring and other
related costs of $16 million;
and
- the favourable year-over-year impact of the fair value
adjustment on non-operating properties of $11 million;
partially offset by,
- the unfavourable year-over-year impact of the fair value
adjustment of derivatives of $13
million; and
- the unfavourable year-over-year impact in net gain on sale of
non-operating properties of $8
million.
partially offset by,
- an overall decline in the underlying operating performance of
retail primarily driven by the 53rd week in 2020. This was
partially offset by improvements in financial services.
Adjusted EBITDA(1) Loblaw adjusted
EBITDA(1) in the fourth quarter of 2021 was
$1,322 million. When compared to
the fourth quarter of 2020, this represented an increase of
$11 million, or 0.8%, which was negatively impacted by
$67 million due to the 53rd week in 2020. The increase in
adjusted EBITDA(1) was primarily due to an improvement
in financial services of $18 million, partially offset by a
decline in retail of $7 million.
Financial services adjusted EBITDA(1) increased by
$18 million compared to the fourth quarter of 2020, primarily
driven by higher revenue as described above, the reversal of
commodity taxes that were accrued in the amount of $27 million, lower contractual charge-off and
lower funding costs. This was partially offset by higher loyalty
program costs and operating costs.
Retail adjusted EBITDA(1) in the fourth
quarter of 2021 decreased by $7 million, which included
the negative impact of the 53rd week in 2020 of $67 million. The decrease was driven by an
increase in retail selling, general and administrative expenses
("SG&A") of $34 million, partially offset by an increase
in retail gross profit of $27
million.
- retail SG&A as a percentage of sales was 20.9%, an increase
of 110 basis points compared to the fourth quarter of 2020. The
unfavourable increase of 110 basis points was primarily driven by
higher expenses related to the normalization of post-lockdown
operating conditions, corporate costs including network
optimization costs and higher costs incurred in drug retail from
providing pharmacy related services, partially offset by a
reduction in COVID-19 costs.
- retail gross profit percentage of 30.9% increased by 150 basis
points compared to the fourth quarter of 2020, from favourable
changes in sales mix in both food and drug retail and improved
business initiatives.
Loblaw adjusted EBITDA(1) included no impact in the
fourth quarter of 2021 and 2020 related to the sale and leaseback
of properties to Choice Properties.
Depreciation and Amortization Loblaw's depreciation
and amortization in the fourth quarter of 2021 was
$623 million, an increase of $14 million compared to the
fourth quarter of 2020. The increase in depreciation and
amortization in the fourth quarter of 2021 was primarily driven by
an increase in depreciation of Information Technology ("IT") and
leased assets and an increase in depreciation in financial services
due to the launch of the PC Money Account.
Depreciation and amortization in the fourth quarter of 2021
included $117 million (2020 – $117 million) of
amortization of intangible assets related to the acquisition of
Shoppers Drug Mart.
Consolidation of Franchises Loblaw has more than
500 franchise food retail stores in its network. Non-controlling
interests at Loblaw represents the share of earnings that relates
to Loblaw's food retail franchisees. Loblaw recorded a net
loss attributable to non-controlling interests of $28 million
in the fourth quarter of 2021. When compared to the fourth quarter
of 2020, this represented a decrease of $74 million or 160.9%.
Loblaw's franchisee earnings are impacted by the timing of when
profit sharing with franchisees is agreed and finalized under the
terms of the agreements.
Loblaw Other Business Matters
Network Optimization In the fourth quarter
of 2021, Loblaw finalized network optimization plans that will
result in banner conversions, closures and right-sizing of
approximately 20 unprofitable retail locations across a range of
banners and formats, the majority of which will be banner
conversions and 3 will be closures within food retail. Loblaw
expects to record charges of approximately $25 million to $35
million resulting from this network optimization. These
charges will be recorded as incurred and are expected to include
equipment, severance, lease related and other costs and will not be
considered an adjusting item. Loblaw expects to realize
approximately $25 million in
annualized EBITDA run-rate savings related to these plans. In the
fourth quarter of 2021, Loblaw recorded charges of $19 million as a result of this network
optimization project. Further charges will be recorded as they are
incurred throughout 2022.
Choice Properties Operating Results
(unaudited)
|
Quarters
Ended
|
|
|
Years
Ended
|
|
|
($ millions except
where otherwise
indicated)
|
Dec. 31,
2021
|
Dec. 31,
2020
|
|
|
Dec. 31,
2021
|
Dec. 31,
2020
|
|
|
For the periods ended
as indicated
|
(12
weeks)
|
(12 weeks)
|
$ Change
|
% Change
|
(52
weeks)
|
(52 weeks)
|
$ Change
|
% Change
|
Revenue
|
$
|
325
|
$
|
322
|
$
|
3
|
0.9%
|
$
|
1,292
|
$
|
1,271
|
$
|
21
|
1.7%
|
Net interest expense
and other
financing charges(i)
|
$
|
499
|
$
|
217
|
$
|
282
|
130.0%
|
$
|
1,377
|
$
|
173
|
$
|
1,204
|
696.0%
|
Net (loss)
income
|
$
|
(162)
|
$
|
117
|
$
|
(279)
|
(238.5) %
|
$
|
24
|
$
|
451
|
$
|
(427)
|
(94.7) %
|
Funds from
Operations(1)
|
$
|
175
|
$
|
172
|
$
|
3
|
1.7%
|
$
|
690
|
$
|
652
|
$
|
38
|
5.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net interest
expense and other financing charges includes a fair value
adjustment on Exchangeable Units.
|
Revenue Revenue in the fourth quarter of 2021 was
$325 million, an increase of
$3 million, or 0.9%, compared to the fourth quarter of 2020,
and included $183 million (2020 – $180 million) generated
from tenants within Loblaw retail. The increase in revenue was
primarily driven by increased occupancy in the industrial
portfolio, partially offset by vacancies in the office
portfolio.
Net Interest Expense and Other Financing Charges Net
interest expense and other financing charges in the fourth quarter
of 2021 were $499 million compared to
$217 million in the fourth quarter of 2020. The increase of
$282 million was primarily driven by
the unfavourable year-over-year impact of the fair value adjustment
on Class B LP units ("Exchangeable Units") of
$285 million.
Net (Loss) Income Net loss in the fourth quarter of
2021 was $162 million, compared to
net income of $117 million in the
fourth quarter of 2020. The decrease of $279 million was
primarily driven by higher interest expense and other financing
charges as described above.
Funds from Operations(1) Funds from
Operations(1) in the fourth quarter of 2021 was
$175 million, an increase of
$3 million compared to the fourth
quarter of 2020, primarily driven by an increase in rental revenue
as described above, a decline in expected credit loss provisions
and the reversal of an expected credit loss on a specific mortgage
receivable, partially offset by fees incurred on the early
repayment of a debenture.
Choice Properties Other Business Matters
Subsequent to year end, Choice Properties entered into an
agreement to increase its interest in two of its residential
projects for consideration of $25
million. The agreement included the purchase of one of
Choice Properties' partners' existing interest in the projects and
the cancellation of the same partners' option to increase their
equity interest in the projects. This transaction closed in
January 2022, following which Choice
Properties' interest in these projects is now 50%.
OUTLOOK(2)
For 2022, the Company expects adjusted net
earnings(1) from continuing operations to increase due
to the results from its operating segments, and to use excess cash
to repurchase shares.
Loblaw Loblaw will continue to execute on retail
excellence in its core grocery, pharmacy and apparel businesses
while advancing its growth initiatives in 2022. In the third year
of the pandemic, Loblaw's businesses remain well placed to service
the everyday needs of Canadians. However, Loblaw cannot predict the
precise impacts of COVID-19 and the current industry volatility on
its 2022 financial results. Loblaw anticipates that in the first
half of 2022 sales will benefit from the continued impact of the
pandemic and elevated industry-wide inflation. As economies reopen
and Loblaw starts to lap elevated 2021 inflationary prices and
COVID-related drug pharmacy services, year on year revenue growth
will be more challenged.
Loblaw expects:
- its retail business to grow earnings faster than sales;
- Earnings Per Share growth in the low double digits, with higher
growth in the first half of the year;
- to invest approximately $1.4
billion in capital expenditures, net of proceeds from
property disposals, reflecting incremental store and distribution
network investments; and
- to return capital to shareholders by allocating a significant
portion of free cash flow to share repurchases.
Choice Properties Choice Properties' goal is to
provide net asset value appreciation, stable net operating income
growth and capital preservation, all with a long-term
focus.
Although there remains uncertainty about the long-term impacts
of the COVID-19 pandemic, Choice Properties is confident that its
business model, stable tenant base, and disciplined approach to
financial management will continue to position it well. At the end
of 2021, Choice Properties' diversified portfolio of retail,
industrial, residential and office properties was 97.1% occupied
and leased to high-quality tenants across Canada. Choice Properties' portfolio is
primarily leased to necessity-based tenants, and logistics
providers, who continue to perform well in this environment and
provide stability to Choice Properties' overall portfolio. The
stability is evident in Choice Properties' financial results and
rent collections, which were approximately 99% of contractual rents
for the year. Despite the unpredictable re-opening of the economy,
Choice Properties is encouraged by high vaccination rates and
anticipate the further lifting of re-opening
measures.
Choice Properties continues to advance its development program,
which provides Choice Properties with the best opportunity to add
high-quality real estate to its portfolio at a reasonable cost and
drive net asset value appreciation over time. Choice Properties has
a mix of active development projects ranging in size, scale, and
complexity, including retail intensification projects, industrial
development and rental residential projects located in urban
markets with a focus on transit accessibility.
Underpinning all aspects of Choice Properties' business model is
a strong balance sheet and a disciplined approach to financial
management. Choice Properties takes a conservative approach to
leverage and financing risk by maintaining strong leverage ratios
and a staggered debt maturity profile.
DECLARATION OF QUARTERLY DIVIDENDS
Subsequent to the end of the fourth quarter of 2021, the
Company's Board of Directors declared a quarterly dividend on GWL
Common Shares, Preferred Shares, Series I, Preferred Shares, Series
III, Preferred Shares, Series IV and Preferred Shares,
Series V payable as follows:
|
Common
Shares
|
$0.600 per share
payable April 1, 2022, to shareholders of record March 15,
2022;
|
|
|
|
|
|
|
Preferred Shares,
Series I
|
$0.3625 per share
payable March 15, 2022, to shareholders of record February 28,
2022;
|
|
|
|
|
|
|
Preferred Shares,
Series III
|
$0.3250 per share
payable April 1, 2022, to shareholders of record March 15,
2022;
|
|
|
|
|
|
|
Preferred Shares,
Series IV
|
$0.3250 per share
payable April 1, 2022, to shareholders of record March 15,
2022;
|
|
|
|
|
|
|
Preferred Shares,
Series V
|
$0.296875 per share
payable April 1, 2022, to shareholders of record March 15,
2022.
|
|
NON-GAAP FINANCIAL MEASURES
The Company uses non-GAAP financial measures and ratios as it
believes these measures and ratios provide useful information to
both management and investors with regard to accurately assessing
the Company's financial performance and financial condition.
Further, certain non-GAAP measures of Loblaw and Choice
Properties are included in this document. For more information on
these measures, refer to the materials filed by Loblaw and Choice
Properties, which are available on sedar.com or at loblaw.ca or
choicereit.ca, respectively.
Management uses these and other non-GAAP financial measures to
exclude the impact of certain expenses and income that must be
recognized under GAAP when analyzing underlying consolidated and
segment operating performance, as the excluded items are not
necessarily reflective of the Company's underlying operating
performance and make comparisons of underlying financial
performance between periods difficult. The Company excludes
additional items if it believes doing so would result in a more
effective analysis of underlying operating performance. The
exclusion of certain items does not imply that they are
non-recurring.
These measures do not have a standardized meaning prescribed by
GAAP and therefore they may not be comparable to similarly titled
measures presented by other publicly traded companies, and should
not be construed as an alternative to other financial measures
determined in accordance with GAAP. The Company's interest in
Weston Foods is presented separately as discontinued operations in
the Company's current and comparative results. Unless otherwise
indicated, all financial information represents the Company's
results from continuing operations.
ADJUSTED EBITDA The Company believes adjusted
EBITDA is useful in assessing and making decisions regarding the
underlying operating performance of the Company's ongoing
operations and in assessing the Company's ability to generate cash
flows to fund its cash requirements, including its capital
investment program.
The following table reconciles adjusted EBITDA to operating
income, which is reconciled to GAAP net earnings attributable to
shareholders of the Company from continuing operations reported for
the periods ended as indicated.
|
Quarters
Ended
|
|
Dec. 31,
2021
|
|
|
Dec. 31,
2020(3,4)
|
|
|
|
|
(12
weeks)
|
|
|
|
(13 weeks)
|
(unaudited)
($ millions)
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
Net earnings
attributable to shareholders of the
Company from continuing operations
|
|
|
|
$
|
428
|
|
|
|
$
|
274
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
|
327
|
|
|
|
214
|
Income
taxes
|
|
|
|
64
|
|
|
|
137
|
Net interest expense
and other financing
charges
|
|
|
|
190
|
|
|
|
244
|
Operating
income
|
$
|
703
|
$
|
336
|
$
|
(30)
|
$
|
1,009
|
$
|
700
|
$
|
332
|
$
|
(163)
|
$
|
869
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with
Shoppers Drug Mart
|
$
|
117
|
$
|
—
|
$
|
—
|
$
|
117
|
$
|
117
|
$
|
—
|
$
|
—
|
$
|
117
|
Fair value adjustment
on investment properties
|
—
|
(107)
|
20
|
(87)
|
—
|
(103)
|
100
|
(3)
|
Gain on sale of
non-operating properties
|
—
|
—
|
(2)
|
(2)
|
(8)
|
—
|
—
|
(8)
|
Fair value adjustment
of derivatives
|
6
|
—
|
—
|
6
|
(7)
|
—
|
—
|
(7)
|
Fair value adjustment
on non-operating properties
|
(2)
|
—
|
—
|
(2)
|
9
|
—
|
—
|
9
|
Restructuring and
other related costs
|
(8)
|
—
|
—
|
(8)
|
8
|
—
|
—
|
8
|
Foreign currency
translation and other company
level activities
|
—
|
—
|
—
|
—
|
—
|
(4)
|
—
|
(4)
|
Adjusting
items
|
$
|
113
|
$
|
(107)
|
$
|
18
|
$
|
24
|
$
|
119
|
$
|
(107)
|
$
|
100
|
$
|
112
|
Adjusted operating
income
|
$
|
816
|
$
|
229
|
$
|
(12)
|
$
|
1,033
|
$
|
819
|
$
|
225
|
$
|
(63)
|
$
|
981
|
Depreciation and
amortization excluding the impact
of the above adjustments(i)
|
506
|
—
|
(86)
|
420
|
492
|
1
|
(78)
|
415
|
Adjusted
EBITDA
|
$
|
1,322
|
$
|
229
|
$
|
(98)
|
$
|
1,453
|
$
|
1,311
|
$
|
226
|
$
|
(141)
|
$
|
1,396
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Depreciation and
amortization for the calculation of adjusted EBITDA excludes $117
million (2020 – $117 million) of amortization of intangible
assets, acquired with Shoppers Drug Mart, recorded by
Loblaw.
|
|
Years Ended
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
|
|
|
(52
weeks)
|
|
|
|
(53 weeks)
|
(unaudited)
($ millions)
|
Loblaw
|
Choice Properties
|
Other
& Intersegment
|
Consolidated
|
Loblaw
|
Choice
Properties
|
Other &
Intersegment
|
Consolidated
|
Net earnings
attributable to shareholders of the
Company from continuing operations
|
|
|
|
$
|
753
|
|
|
|
$
|
957
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
|
994
|
|
|
|
619
|
Income
taxes
|
|
|
|
630
|
|
|
|
470
|
Net interest expense
and other financing charges
|
|
|
|
1,650
|
|
|
|
829
|
Operating
income
|
$
|
2,929
|
$
|
1,400
|
$
|
(302)
|
$
|
4,027
|
$
|
2,357
|
$
|
622
|
$
|
(104)
|
$
|
2,875
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with
Shoppers Drug Mart
|
$
|
506
|
$
|
—
|
$
|
—
|
$
|
506
|
$
|
509
|
$
|
—
|
$
|
—
|
$
|
509
|
Fair value adjustment
on investment properties
|
—
|
(500)
|
177
|
(323)
|
—
|
257
|
(72)
|
185
|
Gain on sale of
non-operating properties
|
(12)
|
—
|
(2)
|
(14)
|
(9)
|
—
|
—
|
(9)
|
Fair value adjustment
of derivatives
|
(13)
|
—
|
—
|
(13)
|
5
|
—
|
—
|
5
|
Fair value adjustment
on non-operating properties
|
(2)
|
—
|
—
|
(2)
|
9
|
—
|
—
|
9
|
Restructuring and
other related costs
|
13
|
—
|
—
|
13
|
38
|
—
|
—
|
38
|
Acquisition
transaction costs and other related costs
|
—
|
—
|
—
|
—
|
—
|
2
|
—
|
2
|
Foreign currency
translation and other company
level activities
|
—
|
—
|
—
|
—
|
—
|
(5)
|
2
|
(3)
|
Adjusting
items
|
$
|
492
|
$
|
(500)
|
$
|
175
|
$
|
167
|
$
|
552
|
$
|
254
|
$
|
(70)
|
$
|
736
|
Adjusted operating
income
|
$
|
3,421
|
$
|
900
|
$
|
(127)
|
$
|
4,194
|
$
|
2,909
|
$
|
876
|
$
|
(174)
|
$
|
3,611
|
Depreciation and
amortization excluding the impact
of the above adjustments(i)
|
2,158
|
3
|
(360)
|
1,801
|
2,087
|
3
|
(345)
|
1,745
|
Adjusted
EBITDA
|
$
|
5,579
|
$
|
903
|
$
|
(487)
|
$
|
5,995
|
$
|
4,996
|
$
|
879
|
$
|
(519)
|
$
|
5,356
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Depreciation and
amortization for the calculation of adjusted EBITDA excludes
$506 million (2020 – $509 million) of amortization
of intangible assets, acquired with Shoppers Drug Mart, recorded by
Loblaw.
|
The following items impacted adjusted EBITDA in 2021 and
2020:
Amortization of intangible assets acquired with Shoppers
Drug Mart The acquisition of Shoppers Drug Mart
in 2014 included approximately $6 billion of definite
life intangible assets, which are being amortized over their
estimated useful lives. Annual amortization associated with the
acquired intangible assets will be approximately $500 million
until 2024 and will decrease thereafter.
Fair value adjustment on investment properties The
Company measures investment properties at fair value. Under the
fair value model, investment properties are initially measured at
cost and subsequently measured at fair value. Fair value is
determined based on available market evidence. If market evidence
is not readily available in less active markets, the Company uses
alternative valuation methods such as discounted cash flow
projections or recent transaction prices. Gains and losses on fair
value are recognized in operating income in the period in which
they are incurred. Gains and losses from disposal of investment
properties are determined by comparing the fair value of disposal
proceeds and the carrying amount and are recognized in operating
income.
Gain on sale of non-operating properties In 2021,
Loblaw recorded a gain related to the sale of non-operating
properties of $12 million. In 2020, Loblaw disposed of
non-operating properties to a third party and recorded a gain of
$9 million related to the sale.
During 2021, Choice Properties disposed of properties and
incurred a gain or loss for each property which was recognized in
fair value adjustment of investment properties. On consolidation,
the Company recorded these properties as fixed assets and were
recognized at cost less accumulated depreciation. As a result,
during 2021, on consolidation, a net gain of $2 million was
recognized in Other and Intersegment.
Fair value adjustment of
derivatives Loblaw is exposed to commodity
price and U.S. dollar exchange rate fluctuations. In
accordance with Loblaw's commodity risk management policy, Loblaw
enters into exchange traded futures contracts and forward contracts
to minimize cost volatility related to fuel prices and the U.S.
dollar exchange rate. These derivatives are not acquired for
trading or speculative purposes. Pursuant to Loblaw's derivative
instruments accounting policy, changes in the fair value of these
instruments, which include realized and unrealized gains and
losses are recorded in operating income. Despite the impact of
accounting for these commodity and foreign currency derivatives on
Loblaw's reported results, the derivatives have the economic impact
of largely mitigating the associated risks arising from price and
exchange rate fluctuations in the underlying commodities and U.S.
dollar commitments.
Fair value adjustment on non-operating
properties Loblaw measures non-operating properties, which
are investment properties and assets held for sale that were
transferred from investment properties, at fair value. Under the
fair value model, non-operating properties are initially measured
at cost and subsequently measured at fair value. Fair value using
the income approach include assumptions as to market rental rates
for properties of similar size and condition located within the
same geographical areas, recoverable operating costs for leases
with tenants, non-recoverable operating costs, vacancy periods,
tenant inducements and terminal capitalization rates. Gains and
losses arising from changes in the fair value are recognized in
operating income in the period in which they arise.
Restructuring and other related costs The Company
continuously evaluates strategic and cost reduction initiatives
related to its store infrastructure, distribution networks and
administrative infrastructure with the objective of ensuring a low
cost operating structure. Only restructuring activities
that are publicly announced related to these initiatives are
considered adjusting items.
In the fourth quarter of 2021, Loblaw recovered
approximately $8 million of restructuring and other
related recoveries related to the previously announced closure of
two distribution centres in Laval
and Ottawa. The recovery is due to
a true-up in estimate of restructuring charges. The year-to-date
restructuring and other related charges were $13 million.
Loblaw is investing to build a modern and efficient expansion to
its Cornwall distribution centre
to serve its food and drug retail businesses in Ontario and Quebec. Volumes from the distribution centres
in Laval will be transferred to
Cornwall and Loblaw expects to
incur additional restructuring costs in 2022 related to these
closures.
Acquisition transaction costs and other related
costs Choice Properties recorded transaction and other
related costs in connection with the acquisition of Canadian
Real Estate Investment Trust.
Foreign currency translation and other company level
activities The Company's consolidated financial
statements are expressed in Canadian dollars. A portion of the
Company's (excluding Loblaw's) net assets are denominated in U.S.
dollars and as a result, the Company is exposed to foreign currency
translation gains and losses. The impact of foreign currency
translation on a portion of the U.S. dollar denominated net assets,
primarily cash and cash equivalents and short-term investments held
by foreign operations, is recorded in SG&A and the associated
tax, if any, is recorded in income taxes. Other company
level activities include fair value adjustments related to
investments and certain financial assets and liabilities held by
the Company.
ADJUSTED NET INTEREST EXPENSE AND OTHER FINANCING
CHARGES The Company believes adjusted net interest
expense and other financing charges is useful in assessing the
ongoing net financing costs of the Company.
The following table reconciles adjusted net interest expense and
other financing charges to GAAP net interest expense and other
financing charges reported for the periods ended as indicated.
|
Quarters
Ended
|
Years Ended
|
(unaudited)
|
Dec. 31,
2021
|
Dec. 31,
2020(4)
|
Dec. 31,
2021
|
Dec. 31,
2020(4)
|
($ millions)
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
Net interest expense
and other financing charges
|
$
|
190
|
$
|
244
|
$
|
1,650
|
$
|
829
|
Add: Fair value
adjustment of the Trust Unit liability
|
(122)
|
(20)
|
(601)
|
239
|
Fair value adjustment of the forward sale
agreement for Loblaw common shares
|
(4)
|
61
|
(188)
|
47
|
Recovery related to Glenhuron
|
189
|
—
|
189
|
—
|
Adjusted net interest
expense and other
financing charges
|
$
|
253
|
$
|
285
|
$
|
1,050
|
$
|
1,115
|
|
|
|
|
|
In addition to certain items described in the "Adjusted EBITDA"
section above, the following items impacted adjusted net interest
expense and other financing charges in 2021 and 2020:
Fair value adjustment of the Trust Unit
liability The Company is exposed to market price
fluctuations as a result of the Choice Properties Trust Units held
by unitholders other than the Company. These Trust Units are
presented as a liability on the Company's consolidated balance
sheets as they are redeemable for cash at the option of the holder,
subject to certain restrictions. This liability is recorded at fair
value at each reporting date based on the market price of
Trust Units at the end of each period. An increase (decrease)
in the market price of Trust Units results in a charge (income) to
net interest expense and other financing charges.
Fair value adjustment of the forward sale agreement for
Loblaw common shares The fair value adjustment of the
forward sale agreement for Loblaw common shares is included in net
interest expense and other financing charges. The adjustment is
determined by changes in the value of the underlying Loblaw
common shares. An increase (decrease) in the market price of Loblaw
common shares results in a charge (income) to net interest expense
and other financing charges. See
Section 3.3, "Components of Total Debt", of the
MD&A in the Company's 2021 Annual Report.
Recovery related to Glenhuron In the
fourth quarter of 2021, Loblaw recorded a recovery of
$301 million related to the Supreme
Court of Canada ("Supreme Court")
decision on Glenhuron. Of the total recovery, $173 million was recorded in net interest and
other financing charges and $128
million was recorded in income taxes. In addition, interest
of $16 million, before taxes, was
recorded in respect of interest income earned on expected cash tax
refunds.
ADJUSTED INCOME TAXES AND ADJUSTED EFFECTIVE TAX
RATE The Company believes the adjusted effective tax rate
applicable to adjusted earnings before taxes is useful in assessing
the underlying operating performance of its business.
The following table reconciles the effective tax rate applicable
to adjusted earnings before taxes to the GAAP effective tax rate
applicable to earnings before taxes as reported for the periods
ended as indicated.
|
Quarters
Ended
|
Years
Ended
|
(unaudited)
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
($ millions except
where otherwise indicated)
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
Adjusted operating
income(i)
|
$
|
1,033
|
$
|
981
|
$
|
4,194
|
$
|
3,611
|
Adjusted net interest
expense and other
financing charges(i)
|
253
|
285
|
1,050
|
1,115
|
Adjusted earnings
before taxes
|
$
|
780
|
$
|
696
|
$
|
3,144
|
$
|
2,496
|
Income
taxes
|
$
|
64
|
$
|
137
|
$
|
630
|
$
|
470
|
Add:
|
Tax impact of items
excluded from adjusted
earnings before taxes(ii)
|
11
|
25
|
99
|
173
|
|
Recovery related to
Glenhuron
|
128
|
—
|
128
|
—
|
|
Remeasurement of
deferred tax balances
|
—
|
(2)
|
—
|
7
|
|
Outside basis
difference in certain Loblaw
shares
|
1
|
4
|
(6)
|
(2)
|
Adjusted income
taxes
|
$
|
204
|
$
|
164
|
$
|
851
|
$
|
648
|
Effective tax rate
applicable to earnings before taxes
|
7.8%
|
21.9%
|
26.5%
|
23.0%
|
Adjusted effective
tax rate applicable to adjusted
earnings before taxes
|
26.2%
|
23.6%
|
27.1%
|
26.0%
|
|
|
|
|
|
|
|
|
(i)
|
See reconciliations of
adjusted operating income and adjusted net interest expense and
other financing charges above.
|
(ii)
|
See the adjusted EBITDA
table and the adjusted net interest expense and other financing
charges table above for a complete list of items excluded from
adjusted earnings before taxes.
|
In addition to certain items described in the "Adjusted EBITDA"
and "Adjusted Net Interest Expense and Other Financing Charges"
sections above, the following items impacted adjusted income taxes
and the adjusted effective tax rate in 2021 and 2020:
Recovery related to Glenhuron In the
fourth quarter of 2021, Loblaw recorded a recovery of
$301 million related to the Supreme
Court decision on Glenhuron. Of the total recovery, $173 million was recorded in net interest and
other financing charges and $128
million was recorded in income taxes. In addition, interest
of $16 million, before taxes, was
recorded in respect of interest income earned on expected cash tax
refunds.
Remeasurement of deferred tax balances In the
third quarter of 2020, as a result of Choice Properties issuing
Trust Units to a related party, the Company recorded a tax recovery
of $9 million related to the
remeasurement of certain deferred income tax balances resulting
from the dilution of its interest in Choice Properties. In the
fourth quarter of 2020, as a result of Choice Properties issuing
Class B partnership units to the Company, the Company recorded a
tax expense of $2 million related to
the remeasurement of certain deferred income tax balances resulting
from the change in its interest in Choice Properties.
Outside basis difference in certain Loblaw
shares The Company recorded a deferred tax recovery of
$1 million in the fourth quarter of 2021 and $6 million
of deferred tax expense year-to-date on temporary differences in
respect of GWL's investment in certain Loblaw shares that are
expected to reverse in the foreseeable future as a result of GWL's
participation in Loblaw's NCIB.
ADJUSTED NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS FROM
CONTINUING OPERATIONS AND ADJUSTED DILUTED NET EARNINGS PER COMMON
SHARE FROM CONTINUING OPERATIONS The Company believes
that adjusted net earnings available to common shareholders from
continuing operations and adjusted diluted net earnings per common
share from continuing operations are useful in assessing the
Company's underlying operating performance and in making decisions
regarding the ongoing operations of its business.
The following table reconciles adjusted net earnings available
to common shareholders of the Company from continuing operations
and adjusted net earnings attributable to shareholders of the
Company from continuing operations to net earnings attributable to
shareholders of the Company and then to net earnings available to
common shareholders of the Company from continuing operations
reported for the periods ended as indicated.
|
Quarters
Ended
|
Years Ended
|
(unaudited)
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
($ millions except
where otherwise indicated)
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
Net earnings
attributable to shareholders of the Company
|
$
|
227
|
$
|
299
|
$
|
431
|
$
|
963
|
Less: Net (loss)
earnings from discontinued operations
|
|
(201)
|
|
25
|
|
(322)
|
|
6
|
Net earnings
attributable to shareholders of the Company
from continuing operations
|
$
|
428
|
$
|
274
|
$
|
753
|
$
|
957
|
Less: Prescribed
dividends on preferred shares in share capital
|
|
(10)
|
|
(10)
|
|
(44)
|
|
(44)
|
Net earnings available
to common shareholders of the Company
from continuing operations
|
$
|
418
|
$
|
264
|
$
|
709
|
$
|
913
|
Less: Reduction
in net earnings due to dilution at Loblaw
|
|
(5)
|
|
(1)
|
|
(9)
|
|
(4)
|
Net earnings available
to common shareholders from continuing
operations for diluted earnings per share
|
$
|
413
|
$
|
263
|
$
|
700
|
$
|
909
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to shareholders of the Company from
continuing operations
|
$
|
428
|
$
|
274
|
$
|
753
|
$
|
957
|
Adjusting items (refer
to the following table)
|
|
(71)
|
|
4
|
|
523
|
|
80
|
Adjusted net earnings
attributable to shareholders of the Company
from continuing operations
|
$
|
357
|
$
|
278
|
$
|
1,276
|
$
|
1,037
|
Less: Prescribed
dividends on preferred shares in share capital
|
|
(10)
|
|
(10)
|
|
(44)
|
|
(44)
|
Adjusted net earnings
available to common shareholders of the
Company from continuing operations
|
$
|
347
|
$
|
268
|
$
|
1,232
|
$
|
993
|
Less: Reduction
in net earnings due to dilution at Loblaw
|
|
(5)
|
|
(1)
|
|
(9)
|
|
(4)
|
Adjusted net earnings
available to common shareholders for
diluted earnings per share from continuing
operations
|
$
|
342
|
$
|
267
|
$
|
1,223
|
$
|
989
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
(in millions)
|
|
147.6
|
|
153.3
|
|
150.2
|
|
153.5
|
|
|
|
|
|
|
|
|
|
The following table reconciles adjusted net earnings available
to common shareholders of the Company from continuing operations
and adjusted diluted net earnings per common share from continuing
operations to GAAP net earnings available to common shareholders of
the Company from continuing operations and diluted net earnings per
common share from continuing operations as reported for the periods
ended as indicated.
|
Quarters
Ended
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
|
(12
weeks)
|
|
(13 weeks)
|
(unaudited)
($ except where
otherwise indicated)
|
Net
Earnings
Available to
Common
Shareholders of
the Company ($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net
Earnings
Available to
Common
Shareholders of
the Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Continuing
Operations
|
$
|
418
|
$
|
2.80
|
$
|
264
|
$
|
1.72
|
Add (deduct) impact of
the following(i):
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers
Drug Mart
|
$
|
47
|
$
|
0.31
|
$
|
45
|
$
|
0.29
|
Fair value adjustment
on investment properties
|
|
(72)
|
|
(0.48)
|
|
(3)
|
|
(0.02)
|
Gain on sale of
non-operating properties
|
|
(2)
|
|
(0.01)
|
|
(3)
|
|
(0.02)
|
Fair value adjustment
of derivatives
|
|
1
|
|
0.01
|
|
(3)
|
|
(0.02)
|
Fair value adjustment
on non-operating properties
|
|
—
|
|
—
|
|
4
|
|
0.03
|
Restructuring and
other related costs
|
|
(4)
|
|
(0.03)
|
|
3
|
|
0.02
|
Fair value adjustment
of the Trust Unit liability
|
|
122
|
|
0.83
|
|
20
|
|
0.13
|
Fair value adjustment
of the forward sale agreement for Loblaw
common shares
|
|
3
|
|
0.02
|
|
(53)
|
|
(0.34)
|
Outside basis
difference in certain Loblaw shares
|
|
(1)
|
|
(0.01)
|
|
(4)
|
|
(0.03)
|
Remeasurement of
deferred tax balances
|
|
—
|
|
—
|
|
2
|
|
0.01
|
Recovery related to
Glenhuron
|
|
(165)
|
|
(1.12)
|
|
—
|
|
—
|
Foreign currency
translation and other company level activities
|
|
—
|
|
—
|
|
(4)
|
|
(0.03)
|
Adjusting items
Continuing Operations
|
$
|
(71)
|
$
|
(0.48)
|
$
|
4
|
$
|
0.02
|
Adjusted Continuing
Operations
|
$
|
347
|
$
|
2.32
|
$
|
268
|
$
|
1.74
|
|
|
|
|
|
|
|
|
|
|
(i) Net of
income taxes and non-controlling interests, as
applicable.
|
|
Years Ended
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
|
(52
weeks)
|
|
(53 weeks)
|
(unaudited)
($ except where
otherwise indicated)
|
Net
Earnings
Available to
Common
Shareholders of
the Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings Available to Common Shareholders of the Company ($
millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Continuing
Operations
|
$
|
709
|
$
|
4.66
|
$
|
913
|
$
|
5.92
|
Add (deduct) impact of
the following(i):
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers
Drug Mart
|
$
|
196
|
$
|
1.30
|
$
|
195
|
$
|
1.28
|
Fair value adjustment
on investment properties
|
|
(270)
|
|
(1.80)
|
|
155
|
|
1.02
|
Gain on sale of
non-operating properties
|
|
(7)
|
|
(0.04)
|
|
(4)
|
|
(0.03)
|
Fair value adjustment
of derivatives
|
|
(6)
|
|
(0.04)
|
|
2
|
|
0.01
|
Fair value adjustment
on non-operating properties
|
|
—
|
|
—
|
|
4
|
|
0.03
|
Restructuring and
other related costs
|
|
5
|
|
0.03
|
|
14
|
|
0.09
|
Acquisition
transaction costs and other related costs
|
|
—
|
|
—
|
|
2
|
|
0.01
|
Fair value adjustment
of the Trust Unit liability
|
|
601
|
|
4.00
|
|
(239)
|
|
(1.56)
|
Fair value adjustment
of the forward sale agreement for Loblaw
common shares
|
|
163
|
|
1.09
|
|
(41)
|
|
(0.27)
|
Outside basis
difference in certain Loblaw shares
|
|
6
|
|
0.04
|
|
2
|
|
0.01
|
Remeasurement of
deferred tax balances
|
|
—
|
|
—
|
|
(7)
|
|
(0.05)
|
Recovery related to
Glenhuron
|
|
(165)
|
|
(1.10)
|
|
—
|
|
—
|
Foreign currency
translation and other company level activities
|
|
—
|
|
—
|
|
(3)
|
|
(0.02)
|
Adjusting items
Continuing Operations
|
$
|
523
|
$
|
3.48
|
$
|
80
|
$
|
0.52
|
Adjusted Continuing
Operations
|
$
|
1,232
|
$
|
8.14
|
$
|
993
|
$
|
6.44
|
|
|
|
|
|
|
|
|
|
|
(i) Net of
income taxes and non-controlling interests, as
applicable.
|
FREE CASH FLOW FROM CONTINUING OPERATIONS The
Company believes free cash flow is useful in assessing the
Company's cash available for additional financing and investing
activities.
The following table reconciles free cash flow to GAAP measures
reported for the periods ended as indicated.
|
Quarters
Ended
|
|
Years Ended
|
|
(unaudited)
|
Dec. 31,
2021
|
Dec. 31,
2020(4)
|
|
Dec. 31,
2021
|
Dec. 31,
2020(4)
|
|
($
millions)
|
(12
weeks)
|
(13 weeks)
|
$ Change
|
(52
weeks)
|
(53 weeks)
|
$ Change
|
Cash flows from
operating activities
|
$
|
1,155
|
$
|
1,574
|
$
|
(419)
|
$
|
5,107
|
$
|
5,521
|
$
|
(414)
|
Less: Cash flows from
operating activities from
discontinued
operations
|
|
12
|
|
56
|
|
(44)
|
|
—
|
|
157
|
|
(157)
|
Cash flows from
operating activities from
continuing
operations
|
$
|
1,143
|
$
|
1,518
|
$
|
(375)
|
$
|
5,107
|
$
|
5,364
|
$
|
(257)
|
Less: Interest
paid
|
|
173
|
|
180
|
|
(7)
|
|
853
|
|
883
|
|
(30)
|
Capital
Investments(i)
|
|
487
|
|
581
|
|
(94)
|
|
1,381
|
|
1,496
|
|
(115)
|
Lease
payments, net
|
|
202
|
|
191
|
|
11
|
|
795
|
|
844
|
|
(49)
|
Free cash
flow from continuing operations
|
$
|
281
|
$
|
566
|
$
|
(285)
|
$
|
2,078
|
$
|
2,141
|
$
|
(63)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
During 2021, additions
to fixed assets in Loblaw included $1 million of prepayments that
were made in 2020 and transferred from other assets. During 2020,
additions to fixed assets in Loblaw included prepayments that were
made in 2019 and transferred from other assets of $66
million.
|
CHOICE PROPERTIES' FUNDS FROM OPERATIONS Choice
Properties considers Funds from Operations to be a useful measure
of operating performance as it adjusts for items included in net
income that do not arise from operating activities or do not
necessarily provide an accurate depiction of its performance.
Funds from operations is calculated in accordance with the Real
Property Association of Canada's
White Paper on Funds from Operations & Adjusted Funds from
Operations for International Financial Reporting Standards
("IFRS") issued in February
2019.
The following table reconciles Choice Properties' Funds from
Operations to net income for the periods ended as
indicated.
(unaudited)
|
Quarters
Ended
|
Years Ended
|
($ millions)
|
Dec. 31,
2021
|
Dec. 31,
2020
|
Dec. 31,
2021
|
Dec. 31,
2020
|
Net (loss)
income
|
$
|
(162)
|
$
|
117
|
$
|
24
|
$
|
451
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
Fair value adjustment
on Exchangeable Units
|
|
372
|
|
87
|
|
863
|
|
(354)
|
Unit distributions on
Exchangeable Units
|
|
73
|
|
73
|
|
293
|
|
289
|
Fair value adjustment
on investment properties
|
|
(96)
|
|
(104)
|
|
(459)
|
|
220
|
Fair value adjustment
on investment property held in
equity accounted joint ventures
|
|
(13)
|
|
—
|
|
(43)
|
|
37
|
Internal expenses for
leasing
|
|
3
|
|
2
|
|
8
|
|
7
|
Capitalized interest
on equity accounted joint ventures
|
|
—
|
|
1
|
|
3
|
|
5
|
Acquisition
transaction costs and other related costs
|
|
—
|
|
—
|
|
—
|
|
2
|
Amortization of
intangible assets
|
|
—
|
|
—
|
|
1
|
|
1
|
Foreign exchange
gain
|
|
—
|
|
—
|
|
—
|
|
(1)
|
Other fair value
(losses) gains, net
|
|
(1)
|
|
(2)
|
|
1
|
|
(3)
|
Income
taxes
|
|
(1)
|
|
(2)
|
|
(1)
|
|
(2)
|
Funds from
Operations
|
$
|
175
|
$
|
172
|
$
|
690
|
$
|
652
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES POLICY CHANGE EFFECTIVE FIRST
QUARTER OF 2021
In 2020, management undertook a review of historical adjusting
items as part of an effort to reduce the number of non-GAAP items
it adjusts for in its financial reporting. Management concluded
that, in order to present adjusting items in a manner more
consistent with that of its Canadian and U.S. peers, the Company
will no longer adjust for asset impairments (net of recoveries),
certain restructuring and other related costs, pension settlement
costs, statutory corporate income tax rate changes or other
items.
Starting in the first quarter of 2021, restructuring and other
related costs will be considered an adjusting item only if
significant and if part of a publicly announced restructuring plan.
Other unusual items will be assessed on a case by case basis based
on their nature, magnitude and propensity to re-occur. This change
took effect in the first quarter of 2021 with restatement of
comparative periods at that time.
The summaries below reconcile the non-GAAP financial measures as
previously reported in 2020 and 2019 to those reported under the
new policy starting in the first quarter of 2021.
The Company's interest in Weston Foods has been presented
separately as discontinued operations in the Company's current and
comparative results. As a result, all financial information
represents the Company's results from continuing operations unless
otherwise indicated, including the following previously reported
Adjusted Operating Income and Adjusted EBITDA.
Adjusted Operating Income and Adjusted EBITDA:
|
Quarters
Ended
|
|
March 21,
2020
|
June 13,
2020
|
October 3,
2020
|
|
(12 weeks)
|
(12 weeks)
|
(16 weeks)
|
(unaudited)
($ millions)
|
Loblaw
|
Choice
Properties
|
Other
|
Consoli-
dated
|
Loblaw
|
Choice
Properties
|
Other
|
Consoli-
dated
|
|
Loblaw
|
Choice
Properties
|
Other
|
Consoli-
dated
|
Adjusted Operating
income -
Previously Reported
|
$
|
692
|
$
|
226
|
$
|
(66)
|
$
|
852
|
$
|
534
|
$
|
201
|
$
|
(62)
|
$
|
673
|
$
|
882
|
$
|
224
|
$
|
17
|
$
|
1,123
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments, net
of recoveries
|
—
|
—
|
—
|
—
|
|
—
|
—
|
—
|
—
|
|
—
|
—
|
—
|
—
|
Restructuring
and other related costs
|
(4)
|
—
|
—
|
(4)
|
|
(8)
|
—
|
—
|
(8)
|
|
(6)
|
—
|
—
|
(6)
|
Adjusting
Items
|
$
|
(4)
|
$
|
—
|
$
|
—
|
$
|
(4)
|
$
|
(8)
|
$
|
—
|
$
|
—
|
$
|
(8)
|
$
|
(6)
|
$
|
—
|
$
|
—
|
$
|
(6)
|
Adjusted operating
income - Restated
|
$
|
688
|
$
|
226
|
$
|
(66)
|
$
|
848
|
$
|
526
|
$
|
201
|
$
|
(62)
|
$
|
665
|
$
|
876
|
$
|
224
|
$
|
17
|
$
|
1,117
|
Depreciation and
amortization
|
594
|
1
|
(78)
|
517
|
|
598
|
—
|
(75)
|
523
|
|
795
|
1
|
(114)
|
682
|
Less: Amortization of
intangible assets
acquired with Shoppers Drug Mart
|
(119)
|
—
|
—
|
(119)
|
|
(118)
|
—
|
—
|
(118)
|
|
(155)
|
—
|
—
|
(155)
|
Adjusted EBITDA -
Restated
|
$
|
1,163
|
$
|
227
|
$
|
(144)
|
$
|
1,246
|
$
|
1,006
|
$
|
201
|
$
|
(137)
|
$
|
1,070
|
$
|
1,516
|
$
|
225
|
$
|
(97)
|
$
|
1,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
Year
Ended
|
|
December 31,
2020
|
December 31,
2020
|
|
(13 weeks)
|
(53
weeks)
|
(unaudited)
($ millions)
|
Loblaw
|
Choice
Properties
|
Other
|
Consolidated
|
Loblaw
|
Choice
Properties
|
Other
|
Consolidated
|
Adjusted Operating
income -
Previously Reported
|
$
|
838
|
$
|
225
|
$
|
(57)
|
$
|
1,006
|
$
|
2,946
|
$
|
876
|
$
|
(168)
|
$
|
3,654
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments, net
of recoveries
|
|
(17)
|
|
—
|
|
(6)
|
|
(23)
|
|
(17)
|
|
—
|
|
(6)
|
|
(23)
|
Restructuring
and other related costs
|
|
(2)
|
|
—
|
|
—
|
|
(2)
|
|
(20)
|
|
—
|
|
—
|
|
(20)
|
Adjusting
Items
|
$
|
(19)
|
$
|
—
|
$
|
(6)
|
$
|
(25)
|
$
|
(37)
|
$
|
—
|
$
|
(6)
|
$
|
(43)
|
Adjusted operating
income - Restated
|
$
|
819
|
$
|
225
|
$
|
(63)
|
$
|
981
|
$
|
2,909
|
$
|
876
|
$
|
(174)
|
$
|
3,611
|
Depreciation and
amortization
|
|
609
|
|
1
|
|
(78)
|
|
532
|
|
2,596
|
|
3
|
|
(345)
|
|
2,254
|
Less: Amortization of
intangible assets
acquired with Shoppers Drug Mart
|
|
(117)
|
|
—
|
|
—
|
|
(117)
|
|
(509)
|
|
—
|
|
—
|
|
(509)
|
Adjusted EBITDA -
Restated
|
$
|
1,311
|
$
|
226
|
$
|
(141)
|
$
|
1,396
|
$
|
4,996
|
$
|
879
|
$
|
(519)
|
$
|
5,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
March 23,
2019
|
June 15,
2019
|
October 5,
2019
|
|
(12 weeks)
|
(12 weeks)
|
(16 weeks)
|
(unaudited)
($ millions)
|
Loblaw
|
Choice
Properties
|
Other
|
Consoli-
dated
|
Loblaw
|
Choice
Properties
|
Other
|
Consoli-
dated
|
Loblaw
|
Choice
Properties
|
Other
|
Consoli-
dated
|
Adjusted Operating
income -
Previously Reported
|
$
|
577
|
$
|
230
|
$
|
(81)
|
$
|
726
|
$
|
709
|
$
|
232
|
$
|
(63)
|
$
|
878
|
$
|
872
|
$
|
226
|
$
|
(12)
|
$
|
1,086
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments, net
of recoveries
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Restructuring
and other related costs
|
|
(12)
|
|
—
|
|
—
|
|
(12)
|
|
(16)
|
|
—
|
|
—
|
|
(16)
|
|
(22)
|
|
—
|
|
—
|
|
(22)
|
Pension annuities and
buy-outs
|
|
(10)
|
|
—
|
|
—
|
|
(10)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Certain prior period
items
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15
|
|
—
|
|
—
|
|
15
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusting
Items
|
$
|
(22)
|
$
|
—
|
$
|
—
|
$
|
(22)
|
$
|
(1)
|
$
|
—
|
$
|
—
|
$
|
(1)
|
$
|
(22)
|
$
|
—
|
$
|
—
|
$
|
(22)
|
Adjusted operating
income - Restated
|
$
|
555
|
$
|
230
|
$
|
(81)
|
$
|
704
|
$
|
708
|
$
|
232
|
$
|
(63)
|
$
|
877
|
$
|
850
|
$
|
226
|
$
|
(12)
|
$
|
1,064
|
Depreciation and
amortization
|
|
580
|
|
—
|
|
(76)
|
|
504
|
|
580
|
|
1
|
|
(82)
|
|
499
|
|
775
|
|
—
|
|
(118)
|
|
657
|
Less: Amortization of
intangible assets
acquired with Shoppers Drug Mart
|
|
(119)
|
|
—
|
|
—
|
|
(119)
|
|
(116)
|
|
—
|
|
—
|
|
(116)
|
|
(157)
|
|
—
|
|
—
|
|
(157)
|
Adjusted EBITDA -
Restated
|
$
|
1,016
|
$
|
230
|
$
|
(157)
|
$
|
1,089
|
$
|
1,172
|
$
|
233
|
$
|
(145)
|
$
|
1,260
|
$
|
1,468
|
$
|
226
|
$
|
(130)
|
$
|
1,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
Year
Ended
|
|
December 31,
2019
|
December 31,
2019
|
|
(12 weeks)
|
(52
weeks)
|
(unaudited)
($ millions)
|
Loblaw
|
Choice
Properties
|
Other
|
Consolidated
|
Loblaw
|
Choice
Properties
|
Other
|
Consolidated
|
Adjusted Operating
income -
Previously Reported
|
$
|
730
|
$
|
225
|
$
|
(59)
|
$
|
896
|
$
|
2,888
|
$
|
913
|
$
|
(215)
|
$
|
3,586
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments, net
of recoveries
|
|
(75)
|
|
—
|
|
38
|
|
(37)
|
|
(75)
|
|
—
|
|
38
|
|
(37)
|
Restructuring
and other related costs
|
|
(24)
|
|
—
|
|
—
|
|
(24)
|
|
(74)
|
|
—
|
|
—
|
|
(74)
|
Pension annuities and
buy-outs
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(10)
|
|
—
|
|
—
|
|
(10)
|
Certain prior period
items
|
|
7
|
|
—
|
|
(7)
|
|
—
|
|
22
|
|
—
|
|
(7)
|
|
15
|
Adjusting
Items
|
$
|
(92)
|
$
|
—
|
$
|
31
|
$
|
(61)
|
$
|
(137)
|
$
|
—
|
$
|
31
|
$
|
(106)
|
Adjusted operating
income - Restated
|
$
|
638
|
$
|
225
|
$
|
(28)
|
$
|
835
|
$
|
2,751
|
$
|
913
|
|
$
(184)
|
$
|
3,480
|
Depreciation and
amortization
|
|
589
|
|
—
|
|
(76)
|
|
513
|
|
2,524
|
|
1
|
|
(352)
|
|
2,173
|
Less: Amortization of
intangible assets
acquired with Shoppers Drug Mart
|
|
(116)
|
|
—
|
|
—
|
|
(116)
|
|
(508)
|
|
—
|
|
—
|
|
(508)
|
Adjusted EBITDA -
Restated
|
$
|
1,111
|
$
|
225
|
$
|
(104)
|
$
|
1,232
|
$
|
4,767
|
$
|
914
|
$
|
(536)
|
$
|
5,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings Available to Common Shareholders and
Adjusted Diluted Net earnings per Common Share are presented
below:
|
Quarters
Ended
|
|
Year Ended
|
|
March 21,
2020
|
June 13,
2020
|
October 3,
2020
|
December 31,
2020
|
December 31,
2020
|
|
(12 weeks)
|
(12 weeks)
|
(16 weeks)
|
(13 weeks)
|
(53 weeks)
|
(unaudited)
($ except where
otherwise indicated)
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Adjusted Total
Company -
Previously Reported
|
$
|
239
|
$
|
1.55
|
$
|
142
|
$
|
0.93
|
$
|
362
|
$
|
2.35
|
$
|
312
|
$
|
2.03
|
$
|
1,055
|
$
|
6.85
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments, net
of recoveries
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
(11)
|
$
|
(0.08)
|
$
|
(11)
|
$
|
(0.08)
|
Restructuring and
other related costs
|
(2)
|
(0.01)
|
(3)
|
(0.02)
|
(3)
|
(0.02)
|
|
—
|
|
—
|
|
(8)
|
|
(0.04)
|
Statutory corporate
income tax rate
change
|
2
|
0.01
|
—
|
—
|
(1)
|
(0.01)
|
|
1
|
|
0.01
|
|
2
|
|
0.01
|
Adjusting
items
|
$
|
—
|
$
|
—
|
$
|
(3)
|
$
|
(0.02)
|
$
|
(4)
|
$
|
(0.03)
|
$
|
(10)
|
$
|
(0.07)
|
$
|
(17)
|
$
|
(0.11)
|
Adjusted Total
Company - Restated
|
$
|
239
|
$
|
1.55
|
$
|
139
|
$
|
0.91
|
$
|
358
|
$
|
2.32
|
$
|
302
|
$
|
1.96
|
$
|
1,038
|
$
|
6.74
|
Continuing
Operations
|
$
|
225
|
$
|
1.46
|
$
|
157
|
$
|
1.03
|
$
|
343
|
$
|
2.22
|
$
|
268
|
$
|
1.74
|
$
|
993
|
$
|
6.44
|
Discontinued
Operations(i)
|
$
|
14
|
$
|
0.09
|
$
|
(18)
|
$
|
(0.12)
|
$
|
15
|
$
|
0.10
|
$
|
34
|
$
|
0.22
|
$
|
45
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The Company's interest
in Weston Foods presented separately as discontinued operations was
not impacted as a result of the non-GAAP financial measures policy
change.
|
|
|
|
Quarters
Ended
|
Year Ended
|
|
March 23,
2019
|
June 15,
2019
|
October 5,
2019
|
December 31,
2019
|
December 31,
2019
|
|
(12 weeks)
|
(12 weeks)
|
(16 weeks)
|
(12 weeks)
|
(52 weeks)
|
(unaudited)
($ except where
otherwise indicated)
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Net Earnings
Available to
Common
Shareholders
of the
Company
($ millions)
|
Diluted
Net
Earnings
Per
Common
Share
|
Adjusted Total
Company -
Previously Reported
|
$
|
201
|
$
|
1.30
|
$
|
263
|
$
|
1.70
|
$
|
391
|
$
|
2.54
|
$
|
262
|
$
|
1.69
|
$
|
1,117
|
$
|
7.24
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments, net
of recoveries
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
(2)
|
$
|
(0.01)
|
$
|
(2)
|
$
|
(0.01)
|
Restructuring and
other related costs
|
|
(5)
|
|
(0.03)
|
|
(6)
|
|
(0.04)
|
|
(7)
|
|
(0.05)
|
|
(10)
|
|
(0.07)
|
|
(28)
|
|
(0.18)
|
Pension annuities
and buy-outs
|
|
(4)
|
|
(0.03)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4)
|
|
(0.03)
|
Certain prior period
items
|
|
—
|
|
—
|
|
6
|
|
0.04
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
0.04
|
Reserve release
related to 2014 tax
audit
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
0.03
|
|
—
|
|
—
|
|
4
|
|
0.03
|
Statutory corporate
income tax rate
change
|
|
—
|
|
—
|
|
8
|
|
0.05
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8
|
|
0.05
|
Adjusting
items
|
$
|
(9)
|
$
|
(0.06)
|
$
|
8
|
$
|
0.05
|
$
|
(3)
|
$
|
(0.02)
|
$
|
(12)
|
$
|
(0.08)
|
$
|
(16)
|
$
|
(0.10)
|
Adjusted Total
Company - Restated
|
$
|
192
|
$
|
1.24
|
$
|
271
|
$
|
1.75
|
$
|
388
|
$
|
2.52
|
$
|
250
|
$
|
1.61
|
$
|
1,101
|
$
|
7.14
|
Continuing
Operations
|
$
|
179
|
$
|
1.15
|
$
|
257
|
$
|
1.66
|
$
|
361
|
$
|
2.34
|
$
|
229
|
$
|
1.48
|
$
|
1,026
|
$
|
6.65
|
Discontinued
Operations(i)
|
$
|
13
|
$
|
0.09
|
$
|
14
|
$
|
0.09
|
$
|
27
|
$
|
0.18
|
$
|
21
|
$
|
0.13
|
$
|
75
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The Company's interest
in Weston Foods presented separately as discontinued operations was
not impacted as a result of this change.
|
There were no impacts to previously reported adjusted net
interest expense and other financing charges as a result of this
change as reported in the Company's 2020 annual and interim
MD&A.
SELECTED FINANCIAL INFORMATION
The following includes selected quarterly financial information
which is prepared by management in accordance with IFRS and is
based on the Company's audited annual consolidated financial
statements for the year ended December 31,
2021. This financial information does not contain all
disclosures required by IFRS, and accordingly, this financial
information should be read in conjunction with the Company's 2021
Annual Report available in the Investor Centre section of the
Company's website at www.weston.ca.
Consolidated Statements of Earnings
|
Dec. 31,
2021
|
Dec. 31,
2020(i)
|
Dec. 31,
2021
|
Dec. 31,
2020(i)
|
(millions of Canadian
dollars except where otherwise indicated)
|
|
(12
weeks)
|
|
(13 weeks)
|
|
(52
weeks)
|
(53 weeks)
|
For the periods ended
as indicated
|
|
(unaudited)
|
|
(unaudited)
|
|
(audited)
|
|
(audited)
|
Revenue
|
$
|
12,902
|
$
|
13,430
|
$
|
53,748
|
$
|
53,270
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Cost of inventories
sold
|
|
8,705
|
|
9,278
|
|
36,435
|
|
36,724
|
Selling, general and
administrative expenses
|
|
3,188
|
|
3,283
|
|
13,286
|
|
13,671
|
|
|
11,893
|
|
12,561
|
|
49,721
|
|
50,395
|
Operating
Income
|
|
1,009
|
|
869
|
|
4,027
|
|
2,875
|
Net Interest Expense
and Other Financing Charges
|
|
190
|
|
244
|
|
1,650
|
|
829
|
Earnings Before
Income Taxes
|
|
819
|
|
625
|
|
2,377
|
|
2,046
|
Income Taxes
|
|
64
|
|
137
|
|
630
|
|
470
|
Net Earnings from
Continuing Operations
|
|
755
|
|
488
|
|
1,747
|
|
1,576
|
Net (Loss) Earnings
from Discontinued Operations
|
|
(201)
|
|
25
|
|
(322)
|
|
6
|
Net
Earnings
|
|
554
|
|
513
|
|
1,425
|
|
1,582
|
Attributable
to:
|
|
|
|
|
|
|
|
|
Shareholders of the
Company
|
|
227
|
|
299
|
|
431
|
|
963
|
Non-Controlling
Interests
|
|
327
|
|
214
|
|
994
|
|
619
|
Net
Earnings
|
$
|
554
|
$
|
513
|
$
|
1,425
|
$
|
1,582
|
Net Earnings (Loss)
per Common Share - Basic ($)
|
$
|
1.48
|
$
|
1.89
|
$
|
2.59
|
$
|
5.99
|
Continuing
Operations
|
$
|
2.84
|
$
|
1.73
|
$
|
4.73
|
$
|
5.95
|
Discontinued
Operations
|
$
|
(1.36)
|
$
|
0.16
|
$
|
(2.14)
|
$
|
0.04
|
Net Earnings (Loss)
per Common Share - Diluted ($)
|
$
|
1.44
|
$
|
1.88
|
$
|
2.52
|
$
|
5.96
|
Continuing
Operations
|
$
|
2.80
|
$
|
1.72
|
$
|
4.66
|
$
|
5.92
|
Discontinued
Operations
|
$
|
(1.36)
|
$
|
0.16
|
$
|
(2.14)
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
(i) Certain comparative figures have
been restated to conform with current year presentation.
|
Consolidated Balance Sheets
As at December
31
|
|
|
|
|
(millions of Canadian
dollars)
|
|
2021
|
|
2020(i)
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,984
|
$
|
2,581
|
Short-term
investments
|
|
879
|
|
575
|
Accounts
receivable
|
|
1,010
|
|
1,183
|
Credit card
receivables
|
|
3,443
|
|
3,109
|
Income taxes
recoverable
|
|
301
|
|
—
|
Inventories
|
|
5,166
|
|
5,385
|
Prepaid expenses and
other assets
|
|
348
|
|
304
|
Assets held for
sale
|
|
91
|
|
108
|
Total Current
Assets
|
|
14,222
|
|
13,245
|
Fixed Assets
|
|
10,782
|
|
11,943
|
Right-of-Use
Assets
|
|
4,059
|
|
4,043
|
Investment
Properties
|
|
5,344
|
|
4,930
|
Equity Accounted Joint
Ventures
|
|
564
|
|
573
|
Intangible
Assets
|
|
6,430
|
|
7,032
|
Goodwill
|
|
4,479
|
|
4,772
|
Deferred Income
Taxes
|
|
113
|
|
139
|
Security
Deposits
|
|
75
|
|
75
|
Other Assets
|
|
1,015
|
|
1,326
|
Total
Assets
|
$
|
47,083
|
$
|
48,078
|
LIABILITIES
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Bank
indebtedness
|
$
|
52
|
$
|
86
|
Trade payables and
other liabilities
|
|
5,923
|
|
6,026
|
Loyalty
liability
|
|
190
|
|
194
|
Provisions
|
|
119
|
|
98
|
Income taxes
payable
|
|
269
|
|
128
|
Demand deposits from
customers
|
|
75
|
|
24
|
Short-term
debt
|
|
450
|
|
1,335
|
Long-term debt due
within one year
|
|
1,520
|
|
924
|
Lease liabilities due
within one year
|
|
742
|
|
799
|
Associate
interest
|
|
433
|
|
349
|
Total Current
Liabilities
|
|
9,773
|
|
9,963
|
Provisions
|
|
90
|
|
116
|
Long-Term
Debt
|
|
12,490
|
|
13,519
|
Lease
Liabilities
|
|
4,242
|
|
4,206
|
Trust Unit
Liability
|
|
4,209
|
|
3,600
|
Deferred Income
Taxes
|
|
2,003
|
|
2,059
|
Other
Liabilities
|
|
1,139
|
|
1,197
|
Total
Liabilities
|
|
33,946
|
|
34,660
|
EQUITY
|
|
|
|
|
Share
Capital
|
|
3,529
|
|
3,599
|
Retained
Earnings
|
|
4,808
|
|
5,226
|
Contributed
Surplus
|
|
(1,462)
|
|
(1,180)
|
Accumulated Other
Comprehensive Income
|
|
84
|
|
166
|
Total Equity
Attributable to Shareholders of the Company
|
|
6,959
|
|
7,811
|
Non-Controlling
Interests
|
|
6,178
|
|
5,607
|
Total
Equity
|
|
13,137
|
|
13,418
|
Total Liabilities
and Equity
|
$
|
47,083
|
$
|
48,078
|
|
|
|
|
|
|
|
(i)
|
Certain comparative
figures have been restated to conform with current year
presentation.
|
Consolidated Statements of Cash Flows
(millions of Canadian
dollars)
For the periods ended as indicated
|
Dec. 31,
2021
|
Dec. 31,
2020
|
Dec. 31,
2021
|
Dec. 31,
2020
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
554
|
$
|
513
|
$
|
1,425
|
$
|
1,582
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Net interest expense
and other financing charges
|
|
189
|
|
245
|
|
1,651
|
|
831
|
Income
taxes
|
|
61
|
|
148
|
|
629
|
|
475
|
Depreciation and
amortization
|
|
533
|
|
572
|
|
2,419
|
|
2,427
|
Loss on sale of
discontinued operations, after income taxes
|
|
230
|
|
—
|
|
317
|
|
—
|
Asset impairments, net
of recoveries
|
|
17
|
|
24
|
|
25
|
|
39
|
Adjustment to fair
value of investment properties and assets held for sale
|
|
(89)
|
|
6
|
|
(325)
|
|
194
|
Change in allowance
for credit card receivables
|
|
—
|
|
(10)
|
|
(32)
|
|
41
|
Change in
provisions
|
|
(9)
|
|
(16)
|
|
10
|
|
(6)
|
|
|
1,486
|
|
1,482
|
|
6,119
|
|
5,583
|
Change in gross credit
card receivables
|
|
(289)
|
|
(91)
|
|
(302)
|
|
368
|
Change in non-cash
working capital
|
|
188
|
|
286
|
|
13
|
|
(57)
|
Income taxes
paid
|
|
(195)
|
|
(106)
|
|
(706)
|
|
(448)
|
Interest
received
|
|
4
|
|
6
|
|
18
|
|
25
|
Interest received from
finance leases
|
|
—
|
|
2
|
|
3
|
|
3
|
Other
|
|
(39)
|
|
(5)
|
|
(38)
|
|
47
|
Cash Flows from
Operating Activities
|
|
1,155
|
|
1,574
|
|
5,107
|
|
5,521
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Fixed asset and
investment properties purchases
|
|
(381)
|
|
(562)
|
|
(1,056)
|
|
(1,235)
|
Intangible asset
additions
|
|
(106)
|
|
(73)
|
|
(400)
|
|
(357)
|
Cash assumed on
initial consolidation of franchises
|
|
—
|
|
—
|
|
—
|
|
14
|
Proceeds from disposal
of assets
|
|
244
|
|
125
|
|
334
|
|
301
|
Net consideration from
disposal of discontinued operations
|
|
1,207
|
|
—
|
|
1,207
|
|
—
|
Lease payments
received from finance leases
|
|
4
|
|
—
|
|
10
|
|
5
|
Change in short-term
investments
|
|
(245)
|
|
(178)
|
|
(272)
|
|
(346)
|
Other
|
|
(36)
|
|
39
|
|
(102)
|
|
(120)
|
Cash Flows from
(used in) Investing Activities
|
|
687
|
|
(649)
|
|
(279)
|
|
(1,738)
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Change in bank
indebtedness
|
|
(114)
|
|
(107)
|
|
(34)
|
|
68
|
Change in short-term
debt
|
|
150
|
|
85
|
|
(101)
|
|
(154)
|
Change in demand
deposits from customers
|
|
16
|
|
24
|
|
51
|
|
24
|
Change in other
financing
|
|
(1)
|
|
235
|
|
(2)
|
|
231
|
Interest
paid
|
|
(173)
|
|
(180)
|
|
(853)
|
|
(883)
|
Settlement of net debt
associated with equity forward sale
agreement
|
|
(275)
|
|
—
|
|
(790)
|
|
—
|
Long-term debt
– Issued
|
|
662
|
|
164
|
|
1,440
|
|
2,492
|
– Repayments
|
|
(606)
|
|
(369)
|
|
(1,408)
|
|
(2,598)
|
Cash rent paid on
lease liabilities - Interest
|
|
(46)
|
|
(47)
|
|
(191)
|
|
(207)
|
Cash rent paid on
lease liabilities - Principal
|
|
(160)
|
|
(145)
|
|
(620)
|
|
(650)
|
Share capital
– Issued
|
|
12
|
|
1
|
|
32
|
|
1
|
– Purchased and held in
trusts
|
|
—
|
|
—
|
|
—
|
|
(21)
|
– Purchased and cancelled
|
|
(167)
|
|
(123)
|
|
(744)
|
|
(123)
|
Loblaw common share
capital – Issued
|
|
24
|
|
1
|
|
102
|
|
30
|
– Purchased and held in trusts
|
|
(50)
|
|
—
|
|
(50)
|
|
(10)
|
– Purchased and cancelled
|
|
(111)
|
|
(275)
|
|
(637)
|
|
(552)
|
Dividends
– To common shareholders
|
|
(7)
|
|
(5)
|
|
(342)
|
|
(328)
|
– To preferred shareholders
|
|
(3)
|
|
(3)
|
|
(44)
|
|
(44)
|
– To non-controlling interests
|
|
(61)
|
|
(59)
|
|
(235)
|
|
(284)
|
Other
|
|
38
|
|
24
|
|
—
|
|
(27)
|
Cash Flows used in
Financing Activities
|
|
(872)
|
|
(779)
|
|
(4,426)
|
|
(3,035)
|
Effect of foreign
currency exchange rate changes on cash and
cash equivalents
|
|
1
|
|
(1)
|
|
1
|
|
(1)
|
Change in Cash and Cash
Equivalents
|
|
971
|
|
145
|
|
403
|
|
747
|
Cash and Cash
Equivalents, Beginning of Period
|
|
2,013
|
|
2,436
|
|
2,581
|
|
1,834
|
Cash and Cash
Equivalents, End of Period
|
$
|
2,984
|
$
|
2,581
|
$
|
2,984
|
$
|
2,581
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Earnings per Common Share
|
Dec. 31,
2021
|
Dec. 31,
2020(i)
|
Dec. 31,
2021
|
Dec. 31,
2020(i)
|
(millions of Canadian
dollars except where otherwise indicated)
|
(12
weeks)
|
(13 weeks)
|
(52
weeks)
|
(53 weeks)
|
For the periods ended
as indicated
|
(unaudited)
|
(unaudited)
|
(audited)
|
(audited)
|
Net earnings
attributable to shareholders of the Company
|
$
|
227
|
$
|
299
|
$
|
431
|
$
|
963
|
Less: Discontinued
Operations
|
(201)
|
|
25
|
|
(322)
|
|
6
|
Net earnings from
continuing operations attributable to
shareholders of the Company
|
$
|
428
|
$
|
274
|
$
|
753
|
$
|
957
|
Prescribed dividends on
preferred shares in share capital
|
(10)
|
|
(10)
|
|
(44)
|
|
(44)
|
Net earnings from
continuing operations available to common
shareholders of the Company
|
$
|
418
|
$
|
264
|
$
|
709
|
$
|
913
|
Reduction in net
earnings due to dilution at Loblaw
|
(5)
|
|
(1)
|
|
(9)
|
|
(4)
|
Net earnings from
continuing operations available to common
shareholders
for diluted earnings per share
|
$
|
413
|
$
|
263
|
$
|
700
|
$
|
909
|
Weighted average common
shares outstanding (in millions)
|
147.0
|
|
153.2
|
|
149.9
|
|
153.4
|
Dilutive effect of
equity-based compensation(ii) (in millions)
|
0.6
|
|
0.1
|
|
0.3
|
|
0.1
|
Diluted weighted
average common shares outstanding
(in millions)
|
147.6
|
|
153.3
|
|
150.2
|
|
153.5
|
Net earnings (loss) per
common share - Basic ($)
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
|
2.84
|
$
|
1.73
|
$
|
4.73
|
$
|
5.95
|
Discontinued
Operations
|
$
|
(1.36)
|
$
|
0.16
|
$
|
(2.14)
|
$
|
0.04
|
Net earnings (loss) per
common share - Diluted ($)
|
|
|
|
|
|
|
|
Continuing
Operations
|
$
|
2.80
|
$
|
1.72
|
$
|
4.66
|
$
|
5.92
|
Discontinued
Operations
|
$
|
(1.36)
|
$
|
0.16
|
$
|
(2.14)
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Certain comparative
figures have been restated to conform with current year
presentation.
|
(ii)
|
Excluded from the
computation of diluted net earnings per common share
were nominal (2020 – 1.4 million) potentially dilutive
instruments, as they were anti-dilutive.
|
SEGMENT INFORMATION
The Company has two reportable operating segments: Loblaw and
Choice Properties. Other and Intersegment includes eliminations,
intersegment adjustments related to the consolidation, cash and
short-term investments held by the Company and all other company
level activities that are not allocated to the reportable operating
segments, as further illustrated below.
The accounting policies of the reportable operating segments are
the same as those described in the Company's 2021 audited annual
consolidated financial statements. The Company measures each
reportable operating segment's performance based on adjusted
EBITDA(1) and adjusted operating income(1).
No reportable operating segment is reliant on any single external
customer.
|
Quarters
Ended
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
(12
weeks)
|
(13 weeks)
|
($ millions)
|
Loblaw
|
Choice
Properties
|
Other
and Intersegment
|
Total
|
Loblaw
|
Choice
Properties
|
Other and
Intersegment
|
Total
|
Revenue
|
$
|
12,757
|
$
|
325
|
$
|
(180)
|
$
|
12,902
|
$
|
13,286
|
$
|
322
|
$
|
(178)
|
$
|
13,430
|
Operating income
(loss)
|
$
|
703
|
$
|
336
|
$
|
(30)
|
$
|
1,009
|
$
|
700
|
$
|
332
|
$
|
(163)
|
$
|
869
|
Net interest expense
(income) and other
financing charges
|
(29)
|
499
|
(280)
|
190
|
|
166
|
217
|
(139)
|
244
|
Earnings
(loss) before income taxes
|
$
|
732
|
$
|
(163)
|
$
|
250
|
$
|
819
|
$
|
534
|
$
|
115
|
$
|
(24)
|
$
|
625
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
703
|
$
|
336
|
$
|
(30)
|
$
|
1,009
|
$
|
700
|
$
|
332
|
$
|
(163)
|
$
|
869
|
Depreciation and
amortization
|
623
|
—
|
(86)
|
537
|
|
609
|
1
|
(78)
|
532
|
Adjusting
items(i)
|
(4)
|
(107)
|
18
|
(93)
|
|
2
|
(107)
|
100
|
(5)
|
Adjusted
EBITDA(i)
|
$
|
1,322
|
$
|
229
|
$
|
(98)
|
$
|
1,453
|
$
|
1,311
|
$
|
226
|
$
|
(141)
|
$
|
1,396
|
Depreciation and
amortization(ii)
|
506
|
—
|
(86)
|
420
|
|
492
|
1
|
(78)
|
415
|
Adjusted operating
income (loss)(i)
|
$
|
816
|
$
|
229
|
$
|
(12)
|
$
|
1,033
|
$
|
819
|
$
|
225
|
$
|
(63)
|
$
|
981
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Certain items are
excluded from operating income to derive adjusted
EBITDA(1). Adjusted EBITDA(1) is used
internally by management when analyzing segment underlying
operating performance.
|
(ii)
|
Excludes $117 million
(2020 – $117 million) of amortization of intangible assets acquired
with Shoppers Drug Mart, recorded by Loblaw.
|
|
|
|
Years Ended
|
|
Dec. 31,
2021
|
Dec. 31,
2020(3,4)
|
|
(52
weeks)
|
(53 weeks)
|
($ millions)
|
Loblaw
|
Choice Properties
|
Other
and Intersegment
|
Total
|
Loblaw
|
Choice Properties
|
Other
and Intersegment
|
Total
|
Revenue
|
$
|
53,170
|
$
|
1,292
|
$
|
(714)
|
$
|
53,748
|
$
|
52,714
|
$
|
1,271
|
$
|
(715)
|
$
|
53,270
|
Operating income
(loss)
|
$
|
2,929
|
$
|
1,400
|
$
|
(302)
|
$
|
4,027
|
$
|
2,357
|
$
|
622
|
$
|
(104)
|
$
|
2,875
|
Net interest expense
(income) and
other
financing charges
|
|
495
|
|
1,377
|
|
(222)
|
|
1,650
|
|
742
|
|
173
|
|
(86)
|
|
829
|
Earnings
(loss) before income taxes
|
$
|
2,434
|
$
|
23
|
$
|
(80)
|
$
|
2,377
|
$
|
1,615
|
$
|
449
|
$
|
(18)
|
$
|
2,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
(loss)
|
$
|
2,929
|
$
|
1,400
|
$
|
(302)
|
$
|
4,027
|
$
|
2,357
|
$
|
622
|
$
|
(104)
|
$
|
2,875
|
Depreciation and
amortization
|
|
2,664
|
|
3
|
|
(360)
|
|
2,307
|
|
2,596
|
|
3
|
|
(345)
|
|
2,254
|
Adjusting
items(i)
|
|
(14)
|
|
(500)
|
|
175
|
|
(339)
|
|
43
|
|
254
|
|
(70)
|
|
227
|
Adjusted
EBITDA(i)
|
$
|
5,579
|
$
|
903
|
$
|
(487)
|
$
|
5,995
|
$
|
4,996
|
$
|
879
|
$
|
(519)
|
$
|
5,356
|
Depreciation and
amortization(ii)
|
|
2,158
|
|
3
|
|
(360)
|
|
1,801
|
|
2,087
|
|
3
|
|
(345)
|
|
1,745
|
Adjusted operating
income (loss)(i)
|
$
|
3,421
|
$
|
900
|
$
|
(127)
|
$
|
4,194
|
$
|
2,909
|
$
|
876
|
$
|
(174)
|
$
|
3,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Certain items are
excluded from operating income to derive adjusted
EBITDA(1). Adjusted EBITDA(1) is used
internally by management when analyzing segment underlying
operating performance.
|
(ii)
|
Excludes
$506 million (2020 – $509 million) of amortization of
intangible assets acquired with Shoppers Drug Mart, recorded by
Loblaw.
|
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the
Company's objectives, plans, goals, aspirations, strategies,
financial condition, results of operations, cash flows,
performance, prospects, opportunities and legal and regulatory
matters. Specific forward-looking statements in this News Release
include, but are not limited to, statements with respect to the
Company's anticipated future results, events and plans, strategic
initiatives and restructuring, regulatory changes including further
healthcare reform, future liquidity, planned capital investments,
and the status and impact of IT systems implementation. These
specific forward-looking statements are contained throughout this
News Release including, without limitation, in the "Outlook"
section of this News Release. Forward-looking statements are
typically identified by words such as "expect", "anticipate",
"believe", "foresee", "could", "estimate", "goal", "intend",
"plan", "seek", "strive", "will", "may", "should" and similar
expressions, as they relate to the Company and its management.
Forward-looking statements reflect the Company's estimates,
beliefs and assumptions, which are based on management's perception
of historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate
in the circumstances. The Company's estimates, beliefs and
assumptions are inherently subject to significant business,
economic, competitive and other uncertainties and contingencies
regarding future events, including the COVID-19 pandemic and as
such, are subject to change. The Company can give no assurance that
such estimates, beliefs and assumptions will prove to be
correct.
Numerous risks and uncertainties could cause the Company's
actual results to differ materially from those expressed, implied
or projected in the forward-looking statements, including those
described in "Enterprise Risks and Risk Management" section,
of the MD&A in the Company's 2021 Annual Report and the
Company's Annual Information Form for the year ended
December 31, 2021.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect the Company's
expectations only as of the date of this News Release. Except as
required by law, the Company does not undertake to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
2021 ANNUAL AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's annual audited consolidated financial statements
and MD&A for the year ended December 31,
2021 are available in the Investor Centre section.
INVESTOR RELATIONS
Shareholders, security analysts and investment professionals
should direct their requests to Roy
MacDonald, Group Vice-President, Investor Relations,
at the Company's Executive Office or by e-mail at
investor@weston.ca.
Additional financial information has been filed electronically
with various securities regulators in Canada through SEDAR. This News Release
includes selected information on Loblaw, a public company with
shares trading on the Toronto Stock Exchange ("TSX"). For
information regarding Loblaw, readers should refer to the materials
filed by Loblaw on SEDAR from time to time. These filings are also
maintained on Loblaw's corporate website at www.loblaw.ca.
This News Release also includes selected information on Choice
Properties, a public real estate investment trust with units
trading on the TSX. For information regarding Choice Properties,
readers should refer to the materials filed by Choice Properties on
SEDAR from time to time. These filings are also maintained on
Choice Properties' website at www.choicereit.ca.
Ce rapport est disponible en français.
|
|
Endnotes
|
|
|
(1)
|
See the "Non-GAAP
Financial Measures" section of this News Release, which includes
the reconciliation of such non-GAAP measures to the most directly
comparable GAAP measures.
|
(2)
|
This News Release
contains forward-looking information. See "Forward-Looking
Statements" section of this News Release and the Company's 2021
Annual Report for a discussion of material factors that could cause
actual results to differ materially from the forecasts and
projections herein and of the material factors and assumptions that
were used when making these statements. This News Release should be
read in conjunction with GWL's filings with securities regulators
made from time to time, all of which can be found at www.weston.ca
and www.sedar.com.
|
(3)
|
Certain figures have
been restated due to the non-GAAP financial measures policy change.
See the "Non-GAAP Financial Measures Policy Change Effective First
Quarter of 2021" section of this News Release.
|
(4)
|
Comparative figures
have been restated to conform with current year
presentation.
|
(5)
|
GWL Corporate refers to
the non-consolidated financial results and metrics of GWL. GWL
Corporate is a subset of Other and Intersegment.
|
(6)
|
Compound Average Growth
Rate ("CAGR") is the measure of annualized growth over a period
longer than one year. CAGR is the mean annual growth rate over a
two year period, 2019 to 2021.
|
|
|
SOURCE George Weston Limited